CAIRO: Downgrading Egypt's credit ranking by International Ranking institutions will negatively affect foreign investments in Egypt that has been influencing the Global Financial Crisis since 2008, according to a banking study. Foreign investments in Egypt, before the Global Financial Crisis, reached U.S. $13.2 billion in June 2008 but they were degenerating to a record of U.S. $2.2 billion in June 2011, the study reported, conducted by Egyptian Financial expert and former director of planning Administration in the National Bank for Development, Ahmed Adam. Downgrading credit ranking will increase the burden of foreign debt if the Egyptian government took loans from abroad because of high prices. Egyptian Prime Minister Essam Sharaf and Minister of Finance Hazem al-Beblawi's remarked the inability to fund from national banks and the desire to get loans from abroad amid the current global economic crisis could lead Egypt to ask for aid from the International Monitory Fund (IMF). This matter could negatively affect the Egyptian sovereign decision since the IMF will ask for a reforming program, in which the most important provision is to cancel support. In addition, the cost of documenting credits will increase to form a big burden on Egyptian importers. The study revealed if Egypt's caretaker government does not take active steps for reform, it could lead to more deterioration even as the internal situation settles down. The factor affecting the Egyptian credit ranking is settled in the situation of liquidity in the local currency, which reflects the unsound funding administration of the Central Bank of Egypt. The administration's policy made the interest rates of the Central Bank of Egypt and could be a negative influence amid the high rate of inflation. If there is no fast resolution to fund the growing rates of local debts, the credit ranking will be downgraded again, according to the study's predictions. Arabic here
