Egypt's economic outlook is rated stable instead of negative on Friday by Fitch Ratings while the sovereign credit rating of long-term credit in foreign and local currency kept B- . Fitch Rating also kept short-term credit rating in foreign currency at B. The move of upgrading has been the first since January 2011.

Minister of Finance, Dr. Ahmed Galal stated that upgrading Egypt's economic outlook by the global rating agencies emphasized reports lately issued by some global financial institutions bearing a positive trend for the future of the Egyptian economy and recognizing the gradually growing signs of tangible improvement in its performance in the coming months.

He also pointed out that fruits of expansionary economic policies, fiscal and structural reforms as well as policies for realizing social justice would be more evident in the coming period especially with more political stabilization and its impact on reassuring local and foreign investors and tourists.

Standard & poor's credit rating institution has already upgraded Egypt's sovereign credit rating last September in addition to some positive reports on Egypt's economy issued lately by Barclays and HSBS banks.

Fitch reported that factors of a relative improvement in political situation, higher foreign reserves and support of Gulf States' aids contributed in alleviating the burdens on the budget. Simultaneously, pursuing expansionary cash and fiscal policies by the government and the CBE contributed also to an initial improvement in the economic performance. Foreign reserves coverage which rose to more than three months of imports and Egypt's Purchasing Manager's Index which rose to exceed 50 last November, the highest level since September 2012 illustrate an expansionary growth in economy. Henceforth, the institution expects the rise of growth rate of GDP during the current fiscal year to about 3.2%, and to about 3.8% in the next year.

The report also indicated the decline in the amount of Egypt's external debt at about 18.9% of GDP, and the extending to the medium and long term with favorable terms could be also positive factors for Egypt's economy.

On the other hand, the report pointed out that the rise in public debt and budget deficit could be the most important risk factors when assessing the Egyptian economy while estimating the deficit rate would remain high although a decline is expected in the current fiscal year with making some financial reforms.

The institution pointed out that the main factors behind assessing the Egyptian economy up and down in the coming period would depend on how far the political stability improved with a positive effect on the egyptian economy, on advancing in fiscal and structural reforms to reduce the budget deficit, as well as on developing the performance of the balance of payments.

(Source: Ministry of Finance)

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