Finance Minister Mohamed Maait
CAIRO - 8 February 2023: The Egyptian government dealt positively with the concerns contained in Moody’s report, which ended with downgrading Egypt’s “credit rating” to B3 with a stable future outlook, despite the integrated measures, policies and measures taken by the government, according to the Minister of Finance, Mohamed Maait.
The minister explained that these measures contributed to Standard & Poor's fixing Egypt's credit rating with a stable outlook, especially in light of commitment to the pace of economic reform supported by the International Monetary Fund (IMF), with an agreement extending to 48 months.
“This allows for prospects for economic growth in the coming years, and enhances the ability to obtain sufficient financing to meet the country's external needs,” he noted.
Maait said that the government is implementing a national program for economic reform to ensure the stability of economic conditions, maintain financial discipline, and increase the competitiveness of the Egyptian economy, in order to complement what has been achieved in the past years.
He referred to some figures of the Egyptian economy during 2021/2022, stating that the total deficit reached 6.1% of the gross domestic product (GDP), down from 6.8% in the year 2020/2021, and a primary surplus for the fifth year in a row amounted to 1.3% of GDP.
The minister pointed out that the Suez Canal has achieved the highest revenue in history, amounting to $7 billion, and it is expected to reach $8 billion during 2023. It also achieved the highest monthly revenue in its history during last January, with $802 million, an annual increase of 47%.
Maait stated that the revenues of the tourism sector rose during the past year to $10.7 billion in light of the strong inflows from various markets such as the Gulf countries, Germany and Poland, in addition to an increase in the proceeds of foreign direct investment by 71%, to reach about $9.1 billion, compared to about $5.2 billion in the prior year, and its diversity among many sectors, the most important of which are: manufacturing industries, construction, communications and information technology.
The minister added that the Moody's report indicates expectations of a gradual decline in the current account deficit in Egypt to about 3% in the next fiscal year 2023-2024, compared to about 3.5% in the fiscal year 2021-2022.
He pointed to the significant improvement in the indicators of the current balance for the fiscal year 2021-2022, as the proceeds of non-oil exports achieved a remarkable increase by 29% annually, in light of the increase in exports of fertilizers, medicines and ready-made clothes.
A large surplus of $4.4 billion was also achieved on the petroleum trade balance, in light of the expansion of natural gas exports, whose monthly revenues have recently reached about $700 million, according to the minister.
The minister explained that the Moody's report expects an improvement in the course of public debt, as a result of Egypt's primary surpluses in the public budget, clarifying that the government was able to build spending reserves to benefit from them when needed without endangering its goals related to achieving primary surpluses in order to reduce the burden of debt borne by the Egyptian economy.
He stated that this comes especially with the possibility of reducing the risks facing the debt burden through the large domestic financing base allocated to the Egyptian government.
The minister indicated that the report commended the state ownership policy document, which contributes to attracting more sustainable capital flows, and in the light of which the government’s offering plan is implemented by offering more than 20 companies for the first time, whether on the stock exchange or to a strategic investor, with the aim of expanding the participation of citizens and the private sector in the development process and participation in the management and ownership of state-owned public institutions.
He stressed that the Moody's report indicates the possibility of raising Egypt's credit rating, through the Egyptian state's implementation of a set of reforms related to enhancing the competitiveness of the economy, as well as enhancing foreign direct investment flows, as the state is implementing a series of reforms to attract more foreign direct investment, and support and competitiveness of Egyptian products, in a way that enhances the growth of Egyptian exports, with efforts to improve the business environment in the country.
Maait explained that the Egyptian government is continuing to implement presidential mandates to reach Egyptian exports to $100 billion annually through several export incentives, by providing the necessary cash liquidity to turn the production wheel, and enhancing the competitiveness of Egyptian products in global markets.
The minister said that starting next year, the amounts allocated to support exports will be disbursed in the same year of export, despite the pressures imposed by successive global crises on the budgets of various countries, including Egypt.