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Fitch Ratings rules out speedy recovery for Egypt: Report International credit rating agency Fitch says rapid credit upgrades for Egypt are unlikely, despite a change in its outlook from 'negative' to 'stable' earlier in January
Egypt's economy will take over two years further to recover from the upheavals following its January 2011 revolution, international credit rating agency Fitch Ratings said Wednesday. “We expect economic performance to improve over our two-year forecast period, but by end-2015 the economy will still be much weaker than in 2010, illustrating the damage to Egypt's credit profile caused by political and economic turmoil,” Fitch said in a new report. The rating agency also said that although Egypt's ratings have stabilised on “tentative political and economic improvements,” “rapid upgrades are unlikely.” Fitch's Egypt Long-term Foreign-Currency rating was changed to “stable” from “negative” in early January, after three years of consecutive downgrades since the start of the revolution that toppled long-time autocrat Hosni Mubarak in early 2011. The reassessment came after Gulf nations pledged $12 billion in aid to Egypt following the ouster of Mubarak's successor Mohamed Morsi, in July 2013. The agency currently places Egypt's long-term ratings at "B-", reflecting “substantial risks and challenges,” according to Fitch. Besides political concerns, the agency believes that “donor inflows will not be sufficient to end foreign-exchange rationing and making major inroads into the large fiscal deficit will be tough.” Egypt's net international reserves, in decline since the January 2011 uprising, have been managed by the Central Bank of Egypt in a series of FOREX auctions since late 2012. Egypt's budget deficit stands at 14 percent of GDP, with an entrenched and wasteful state subsidy system that accounted for close to 30 percent of public spending in the 2012/2013 fiscal year. In public finances, Fitch forecasts “a budget deficit close to double digits as a percentage of GDP in FY15 (year ending June 2015) and a debt/GDP ratio of over 90 percent.” In terms of external finance, “Egypt has lost, and is not expected to regain, its net creditor position by 2015.” The agency expects economic growth, which reached 1.5 percent of GDP in the last quarter, to strengthen modestly, though not enough to prevent a rise in unemployment, which hit 13.4 percent last fall. http://english.ahram.org.eg/News/94094.aspx
