The Rating Agency attributed the revision to the deterioration in Egypt's external liquidity position and reduced prospects for bond market access, leaving the country vulnerable to adverse global conditions at a time of high current account deficits (CADs) and external debt maturities.
Standard & Poor's (S&P) kept Saturday Egypt's long and short-term foreign and local currency sovereign credit ratings at B/B with a stable outlook.
Fitch elaborated in a statement that Egypt's ratings are supported by its recent record of fiscal and economic reforms, its large economy with robust growth and strong support from bilateral and multilateral partners.
Egypt's ratings are supported by its recent record of fiscal and economic reforms, which the authorities are continuing, as well as its large economy, which has demonstrated stability and resilience through the global health crisis, the rating agency clarified.
Fitch expected continued pressure on operating profitability due to lower interest rates and higher loan impairment charges as borrower support measures end.
It added that the blockage would reduce global reinsurers’ earnings but should not materially affect their credit profiles, while prices for marine reinsurance will rise further as a consequence of the container ship ‘Ever Given’ grounding in the canal.
The rating agency clarified that the rating and outlook are reinforced by its recent track record of fiscal and economic reforms, which the authorities are furthering, as well as its large economy, which has demonstrated stability and resilience through the global health crisis.
Egypt succeeded in reversing the external debt curve, to record a decline for the first time in more than 4 years.
Turkey's deteriorating conditions are the reason.
Egypt was the only country in the Middle East and Africa, whose credit rating was maintained with a stable outlook by S&P Global Ratings, Moody's and Fitch, Ma'it said.
Fitch expected real GDP growth to be 2.5 percent in the fiscal year ending June 2021 (FY21), well below average growth of 5.5 percent in FY18 and FY19.
Assistant Prime Minister Usama Gohar said that recent developments in Egypt contributed to improving the outlook of Fitch reports about the Egyptian market.
Fitch clarified Monday that Egypt's ratings are supported by a recent track record of economic and fiscal reforms, and improvements to macroeconomic stability and external finances.
Fitch said that pent-up private sector credit demand was high thanks to robust economic growth, expecting GDP growth of 5.5% in 2019 and in 2020.
The institution said in a statement that it takes pride in transferring its knowledge and solutions to the Egyptian financial sector to further enhance the advancement of financial professionals.
Fitch attributed the ratings to progress achieved in executing the economic and fiscal reform program, greater macroeconomic stability and improving external finances.
The Central Agency for Public Mobilization and Statistics (CAPMAS) announced that annual consumer price inflation slipped to 13.8 percent in June 2018.
A wrap-up of the most prominent business news of the day
Fitch anticipated in a report that the Central Bank of Egypt will cut rates further this year (another 200-300bps).
The bank’s profit dropped by 47.3 percent in the first nine months of 2017.