Egypt’s recent efforts aimed at reviving its ailing economy are beginning to pay dividends after Moody’s decided to raise the country’s credit rating on Tuesday.
The ratings agency said Egypt’s improving economy and its government’s ongoing commitment to fiscal reforms are among the reasons for its decision to raise the country’s rating to B3 with a stable outlook.
Egypt’s economy has been struggling since the overthrow of former leader Hosni Mubarak in 2011. The ensuing political instability disrupted the vital tourism industry and made foreign investors wary of setting up shop in the country.
In the past 10 months, however, Egypt’s new president Abdel Fattah al-Sisi has pushed through a series of reforms aimed at jumpstarting the economy of the Arab world’s most populous country.
Egypt highlighted Sisi’s reform agenda at a major economic summit last month that attracted business and political leaders from around the globe who pledged to invest billions in the country. Among the pledges was another $12.5 billion in aid from friendly Gulf states, which will help Egypt to meet its external debt obligations this year, Moody’s said.
The ratings agency now expects Egypt’s gross domestic product to recover from last year’s 2.2% to 4.5% in 2015, and then to rise to between 5% and 6% in the next four years. The GDP outlook is largely in line with earlier declarations by Egyptian officials.
“This expected level is based on an assumption that domestic political stability will continue, as will improvements in the business environment, which in Moody’s view will be conducive to higher investment levels,” the ratings agency said.
Moody’s rating upgrade comes at a time when Egypt is preparing to return to the bond market, for the first time since the Arab Spring erupted in the region in 2010.
Moody’s also believes that Egypt’s administration will continue with its fiscal and economic reforms, which ultimately will help reduce the country’s fiscal deficits.
Source: Wall Street Journal