Egypt’s credit position appears stronger thanks to a positive review of its economic reform programme by the IMF.
As well as representing a vote of confidence in Egypt’s policies, the successful conclusion of the IMF review unlocks another $1.25 billion of funding, bringing the total to $3.95 billion.
“Reforms are showing positive results,” said ratings agency Moody’s in a research note, which noted that foreign exchange rate liberalisation in November 2016 had helped reduce balance-of-payment pressures.
The Egyptian pound fell by about 50% against the dollar after the government stopped pegging the currencies. Although import costs rose, the move had the positive effect of practically eliminating the parallel foreign-exchange market, said the agency.
Moody’s estimates Egypt’s general government fiscal deficit will fall to 9.5% of GDP by the end of this fiscal year.
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