Egypt expresses 'deep dissatisfaction' to Netherlands over embassy attack    Global pressure mounts as Gaza fighting intensifies and death toll surges    Egypt, India's BDR Group in talks to establish biologics, cancer drug facility    AUC graduates first cohort of film industry business certificate    At TICAD, Egypt's education minister signs pacts with Casio, SAPIX    Egypt holds special importance for our investments across diverse sectors: Japanese minister    Cairo, Tokyo sign LOI to expand educational cooperation, support for persons with disabilities    Madbouly invites Japanese firms to establish industrial zone in SCZONE    Egypt to tighten waste rules, cut rice straw fees to curb pollution    Al-Sisi meets Qatar PM, Bahrain security adviser to discuss Gaza crisis, regional stability    Indian tourist arrivals to Egypt jump 18.8% in H1-2025: ministry data    Egyptian pound down vs. US dollar at Monday's close – CBE    Egypt's FM, Palestinian PM visit Rafah crossing to review Gaza aid    Egypt prepares unified stance ahead of COP30 in Brazil    Egypt recovers collection of ancient artefacts from Netherlands    Egypt harvests 315,000 cubic metres of rainwater in Sinai as part of flash flood protection measures    Egypt, Namibia explore closer pharmaceutical cooperation    Fitch Ratings: ASEAN Islamic finance set to surpass $1t by 2026-end    Renowned Egyptian novelist Sonallah Ibrahim dies at 88    Egyptian, Ugandan Presidents open business forum to boost trade    Al-Sisi says any party thinking Egypt will neglect water rights is 'completely mistaken'    Egypt's Sisi warns against unilateral Nile measures, reaffirms Egypt's water security stance    Egypt's Sisi, Uganda's Museveni discuss boosting ties    Egypt, Huawei explore healthcare digital transformation cooperation    Egypt's Sisi, Sudan's Idris discuss strategic ties, stability    Egypt to inaugurate Grand Egyptian Museum on 1 November    Greco-Roman rock-cut tombs unearthed in Egypt's Aswan    Egypt reveals heritage e-training portal    Sisi launches new support initiative for families of war, terrorism victims    Egypt expands e-ticketing to 110 heritage sites, adds self-service kiosks at Saqqara    Palm Hills Squash Open debuts with 48 international stars, $250,000 prize pool    On Sport to broadcast Pan Arab Golf Championship for Juniors and Ladies in Egypt    Golf Festival in Cairo to mark Arab Golf Federation's 50th anniversary    Germany among EU's priciest labour markets – official data    Paris Olympic gold '24 medals hit record value    A minute of silence for Egyptian sports    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Experts demand swift action after S&P's 'negative' Egypt outlook
Published in Daily News Egypt on 19 - 10 - 2011

CAIRO: Standard & Poor's (S&P) on Tuesday described the outlook for the Egyptian economy as “negative,” though the assessment came as no surprise to experts.
“Credit rating agencies come and assess the current economic situation, and our economy has been taking several hits since the revolution,” Magda Kandil, executive director of the Egyptian Center for Economic Studies, said.
Still, the assessment is not to be ignored and “demands policy adjustment,” she added.
“The government, the Cabinet, [Supreme Council of the Armed Forces] SCAF or whoever is in charge, should take it as a wake-up call,” Kandil told Daily News Egypt.
S&P downgraded long-term foreign and local currency ratings due to negative projections arising from an extended transition period.
S&P lowered Egypt's long-term foreign currency sovereign credit rating to 'BB-' from 'BB' and long-term local currency rating to 'BB-' from 'BB+.' It also affirmed 'B' short-term ratings on Egypt.
The ratings agency warned of further downgrades in the future pending political developments, making it the second ratings agency to downgrade Egypt this month.
Earlier in October, Fitch Ratings downgraded Egypt's long-term default and currency outlook ratings to “negative” as wavering political decisions continue to delay economic growth.
S&P's latest assessment seems to be in line with the current economic climate, and was even forecasted by Finance Minister Hazem El-Beblawi, Kandil said.
She attributed the downgrade to declining foreign reserves, a mere trickle of tourist income and lack of growth, citing a dearth of FDI inflow and recent GDP contractions.
At the moment, higher rates and increased costs of borrowing are an added pressure on the government as it strives to keep apace with commitments, Kandil noted.
In a statement, S&P analyst Trevor Cullinan said, "The downgrade reflects our opinion that risks to macroeconomic stability have risen during the transition period for Egyptian political reform, which we expect to evolve over the next two years."
When asked about the severity of the downgrade, Kandil said, “The decision is not too harsh. Obviously [agencies] are now sailing on the conservative side globally, having learned their lessons since the financial crisis in order not to be blamed as before for overlooking economic risks and waiting for crises to occur.”
Karim Helal, board member of Egypt's CI Capital, was also unsurprised. “It's been coming, given the dwindling reserves, economic stagnation and the reductions in tourism. It was already discounted by investors on the market, and probably poses no significant impact — it's only a reflection of the current situation,” he said.
Investor confidence is already on shaky ground, said Helal, adding that “we're not waiting for downgrades from S&P, all the data is here and in the news daily.”
While the damage is already done and quite visible, Helal said it can be reversed if there is a quick turnaround in tourism, an increase in revenues and political clarity following the elections.
“A strong government with a clear roadmap can improve future prospects and [deter] any further downgrades,” he said.
S&P attributed the anticipated risks mainly to the continuation of street protests over the coming period until presidential elections, which it expects to take place in early 2013.
According to the agency's projections, ratings could stabilize at current levels “if Egypt's political transition strengthens the social contract and if government debt dynamics remain close to or better than our expectations.”
However, the agency warned that ratings could lowered again between now and 2012, “if the political transition falters in a manner that leads to renewed political turmoil.”
Parliamentary hopefuls began submitting their applications last week, but the first elections since the ouster of Hosni Mubarak come at a critical time for Egypt on the security, economic and political fronts.
On Oct. 9 a violent crackdown by army forces on protesters marching for Coptic rights left 25 people dead and more than 300 injured. El-Beblawi, also deputy prime minister, submitted his resignation in protest, but remained in his post after it was rejected by the ruling military council.
People's Assembly elections are set to begin on Nov. 28 while voting for the Shoura Council is scheduled for Jan. 29 next year. The People's Assembly is scheduled to hold its first session on March 17 and the Shoura Council on March 24.
A committee will then set out to draft a new constitution within six months, after which presidential elections are to take place.
In the meantime, measures to improve the economic conditions “require an immediate effort by government to consolidate fiscal deficit by mobilizing additional revenues and more comprehensive strategies to ration spending and raise funds,” Kandil said.
The issue at hand now is “whether such predictions are ignored [or] actions are taken to protect investors and alert them to risks,” she added.
“The only way to break a possible vicious cycle… demands a firmer approach by the current transitional government to take proper measures.”


Clic here to read the story from its source.