Egypt’s GDP growth seen 5.5% up in 2020 – Fitch Ratings

Fitch Ratings has lauded Egypt’s decision on interest rate cuts for the third time this year.

Egypt’s central bank decided, for the third time this year, to cut interest rates by 1 percent, reducing the credit and discount rates by 100 basis points to 13.75 percent.

Two weeks ago, Fitch said in a press release on Monday that September’s cut in the Central Bank of Egypt’s discount rate to 13.75 percent, could provide a much-needed boost to private-sector lending, provided positive economic momentum continues.

Fitch said pent-up private sector credit demand was high thanks to robust economic growth, expecting GDP growth of 5.5 percent in 2019 and in 2020.

‘Government lending still represents a large share of total bank lending at about 29%, but greater exposure to private-sector lending would diversify banks’ business models, encouraging a gradual reduction of government loans and bond holdings,’ the note said.

‘Private-sector customers provide banks with good opportunities for revenue growth and diversification, particularly through fee income and cross-selling. Higher exposure to the

private sector would not necessarily compromise banks’ underwriting standards or weaken their asset quality. The private sector includes several large, well-established businesses, notably in construction, real estate development, telecommunications and textiles,” the note added’.

Fitch Ratings is one of the “Big Three credit rating agencies”, It is one of the three nationally recognized statistical rating organizations (NRSRO) designated by the U.S. Securities and Exchange Commission in 1975.

Source: MENA

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