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Moody's upgrades Egypt's outlook to stable International ratings agency upgrades Egypt's economic outlook on the back of structural fiscal reform and external donors' support
International credit ratings agency Moody's on Monday upgraded Egypt's outlook to stable from negative. The upgrade was attributed to improved political stability, fiscal consolidation and signs of growth recovery, but limited by high fiscal deficits and government debt levels. The ratings agency also affirmed Egypt's government bond rating at Caa1. Since the election of President Abdel-Fattah El-Sisi in July, the government has undertaken structural reform of the state budget. This included a bold move to cut energy subsidies by up to 78 percent and implementing controversial taxes. The Egyptian government set a target for growth at six percent by fiscal year (FY) 2018/19, to be achieved through partnerships with the private sector. Egypt's growth stood at a low 2.2 percent at the end of the last fiscal year but on the back of relative strong growth levels in the last quarter, the rate reached 3.7 percent. The state budget deficit hit 12.6 percent in the last FY but is targeted to reach 10.5 percent this FY and 8-9 percent in five years, while government debt is targeted to become 80-85 percent of GDP in five years after reaching 97 percent of GDP last year. Moody's saw 'strong support from external donors' as a factor for upgrading the country's outlook. Since the removal of president Mohamed Morsi in July 2013, Saudi Arabia, the United Arab Emirates and Kuwait have pledged $12 billion in aid to Egypt. Saudi Arabia has further called on the international community to attend a donors conference – later renamed Egypt's Economic Summit – to support the Egyptian economy. Moody's also affirmed the ratings for Egypt's backed global bonds at Aaa, foreign currency bond ceiling at B3, foreign currency deposit ceiling at Caa2 and local currency country risk ceiling at Ba3. http://english.ahram.org.eg/News/113504.aspx
