Credit rating agency Standard & Poor’s announced that it has revised its assessment of the degree of prospects for Egyptian debt from “stable” to “negative” due to the need for external financing that it expects in relation to public finances.
The credit rating of Egypt’s sovereign debt remains at ‘B/B’ but could be revised in the next 12 months, Standard & Poor’s said.
The agency lived up to its expectations that the Egyptian government would need significant funding in 2023 and 2024, estimated at $17 billion and $20 billion respectively.
“According to our estimates, the Egyptian government allocates forty percent of its total income to the payment of interest on its debts,” the agency said in a statement, noting that “the bulk of these payments relate to domestic debt service, and not to international obligations.”
The Egyptian government has launched a series of reforms, including the privatization of a number of state-owned or army-owned companies, in response to requests from the International Monetary Fund on January 10 to draw up a plan for relief.
Since Abdel Fattah al-Sisi came to power, Egypt has received financial support from Saudi Arabia and the UAE. But the two Gulf states are now pushing for reform demands formulated by the International Monetary Fund.
Currently, “relatively limited evidence of reforms has increased pressure on the Egyptian pound,” the agency said, adding that “we believe the lack of progress in this area increases the risk of multilateral lenders (the International Monetary Fund and the World Bank). ) and bilateral creditors withholding or not disbursing funds to Egypt.
The International Monetary Fund expects growth of 3.7 percent in 2023, compared to 6.6 percent in 2022, and inflation will reach 21.6 percent year-on-year, compared to 8.5 percent in 2022.
You must log in to post a comment.