(MENAFN) In a recent development, Fitch Ratings Agency announced its decision to revise Egypt's outlook from stable to positive, signaling growing confidence in the country's economic prospects. Despite maintaining Egypt's rating at "B-", Fitch highlighted several factors contributing to this positive outlook, including low risks associated with external financing and the robustness of foreign direct investment inflows.
The endorsement from Fitch comes on the heels of the International Monetary Fund's (IMF) approval of expanded financial support for Egypt in March, amounting to a substantial eight billion dollars. This financial assistance is expected to provide vital support to Egypt's economic reforms, with an IMF official noting that the loan program will facilitate the gradual reduction of the country's debt burden, thereby enhancing its fiscal sustainability.
Egypt's economic landscape further received a boost in February with a significant real estate investment of USD35 billion from the United Arab Emirates (UAE). The investment is earmarked for the development of the Ras El Hekma project, situated along the picturesque Mediterranean coast, signaling confidence from international partners in Egypt's growth potential and investment opportunities.
Fitch emphasized the importance of Egypt's efforts to contain off-budget spending as a crucial step towards reducing risks associated with public debt sustainability. Additionally, the agency noted that the country's exchange rate flexibility is expected to be more sustainable, partly due to rigorous monitoring within the framework of the Extended Fund Facility program signed between Egypt and the IMF, set to continue until late 2026.
This positive outlook from Fitch aligns with Moody's credit rating agency's earlier decision in March to revise Egypt's outlook to "positive." While Moody's maintained Egypt's rating unchanged, citing concerns related to the high proportion of government debt and weak debt sustainability compared to peer countries, the overall sentiment reflects growing confidence in Egypt's economic trajectory and reform efforts.
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