Moody’s Investors Service said on Thursday that the International Monetary Fund (IMF) review of Egypt’s economic reform programme is “credit positive indicating the current account deficit to shrink gradually to 3 percent of GDP by the end of 2020.”
Moody’s maintains “stable outlook” on Egypt due to economic reforms with B3 rating.
The B3 rating is at number 16 out of the 21 ratings-tier followed by global rating agencies.
IMF’s Executive Board completed a week earlier the first review of Egypt’s economic reform programme and approved the second tranche worth $1.25 billion of three-year, $12-billion loan.
The positive review report of the IMF indicates the progress in implementing reforms will help reduce the nation’s fiscal and external vulnerabilities, according to Moody’s.
Moody’s praised the Egyptian government decision of floating the currency as contributing in limiting pressures on payment balance, boosting the state foreign liquidity, eliminating the unofficial market, and incredibly increasing the cash reserve.
Egypt’s foreign currency reserves reached $31.3 billion by the end of June, the highest ever since March 2011, when it was estimated at $36 billion.
Moody’s report forecasted “a gradual narrowing of Egypt’s general government fiscal deficit to about 9.5 percent of GDP by the end of this fiscal year -June 30, 2018- from around 11 percent in 2017, and an improvement in the debt/GDP ratio to 86.5 percent from 95 percent over the same period.”