Saudi Press

Saudi Arabia and the world
Sunday, Jun 01, 2025

Egypt's cost of borrowing falls as inflation is brought under control

Egypt's cost of borrowing falls as inflation is brought under control

The country has a large financing need but relatively low levels of foreign currency debt. Declining inflation and a "credible monetary policy" have allowed Egypt's central bank to continue to reduce interest rates and the domestic cost of its borrowing, Moody's said.
The lower borrowing costs, a diversified economy and relatively low foreign currency debt contributed to the country's stable outlook, the rating agency said in its annual credit analysis on Egypt on Wednesday.

It has a "B2" sovereign rating on the North African country.

"This credit outlook reflects the resilience of Egypt's credit profile against financing shocks despite high exposure, a positive for its credit profile. This is driven by its effective and credible government policies," Elisa Parisi-Capone, vice president and senior analyst at Moody's, said.

"A lengthening track record of credible and effective fiscal, economic and debt management would also reflect positively on Egypt's credit profile."

Egypt's main credit weakness remains its very large government financing requirement of 30 per cent to 40 per cent of gross domestic product annually, with high roll-over rates that potentially expose the economy to tightening domestic or external financing conditions, Moody's said.

However, its limited exposure to foreign currency liabilities and its ample foreign exchange reserves, which can cover maturing external liabilities for the next three years, provide it with some protection from external shocks.

The International Monetary Fund approved a request from Egypt in May for emergency financial assistance to help cope with the economic fallout from the Covid-19 pandemic.

The $2.77 billion (Dh10.17bn) borrowed through a Rapid Financing Instrument was intended to address pressing financial needs in the most affected sectors, including health care, and to support vulnerable groups.

The fund also approved a new 12-month $5.2bn loan in June to help Egypt deal with pandemic-related challenges and finance its budget deficit and balance of payments shortfalls.

As with other countries, the pandemic has affected the livelihoods of Egyptians and led to a deterioration in economic conditions.

The IMF expects economic growth to "slow down considerably" in 2020 to 2021 as the tourism sector and domestic activity weaken, it said in a report on Tuesday.

"The external accounts are expected to deteriorate from portfolio outflows and the shock to tourism and remittances, resulting in an urgent balance of payments need," the fund said.

Moody's said a "new bout of capital outflows which significantly erode the central bank's exchange reserves and threaten external stability" could lead to a ratings downgrade.

On the other hand, further improvements in debt affordability and lower gross financing needs would result in a sovereign credit rating upgrade, the rating agency said.

Securing jobs for people entering the labour market remains a long-term social challenge, despite a stronger employment market, the agency said.
Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
European and Arab Ministers Convene in Madrid to Address Gaza Conflict
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
UAE Offers Free ChatGPT Plus Subscriptions to Citizens
Lebanon Initiates Plan to Disarm Palestinian Factions
Iran and U.S. Make Limited Progress in Nuclear Talks
The Daily Debate: The Fall of the Dollar — Strategic Reset or Economic Self-Destruction?
Trump Administration's Tariff Policies and Dollar Strategy Spark Global Economic Debate
OpenAI Acquires Jony Ive’s Startup for $6.5 Billion to Build a Revolutionary “Third Core Device”
Turkey Weighs Citizens in Public as Erdoğan Launches National Slimming Campaign
Saudi-Spanish Business Forum Commences in Riyadh
Saudi Arabia and Spain Sign MoU to Boost SME Sectors
UK Suspends Trade Talks with Israel Amid Gaza Offensive
Iran and U.S. Set for Fifth Round of Nuclear Talks Amid Rising Tensions
Russia Expands Military Presence Near Finland Amid Rising Tensions
Indian Scholar Arrested in Crackdown Over Pakistan Conflict Commentary
Israel Eases Gaza Blockade Amid Internal Dispute Over Military Strategy
President Biden’s announcement of advanced prostate cancer sparked public sympathy—but behind closed doors, Democrats are in panic
A Chinese company made solar tiles that look way nicer than regular panels!
Indian jet shootdown: the all-robot legion behind China’s PL-15E missiles
The Chinese Dragon: The True Winner in the India-Pakistan Clash
Australia's Venomous Creatures Contribute to Life-Saving Antivenom Programme
The Spanish Were Right: Long Working Hours Harm Brain Function
Did Former FBI Director Call for Violence Against Trump? Instagram Post Sparks Uproar
US and UAE Partner to Develop Massive AI Data Center Complex
Apple's $95 Million Siri Settlement: Eligible Users Have Until July 2 to File Claims
US and UAE Reach Preliminary Agreement on Nvidia AI Chip Imports
President Trump and Elon Musk Welcomed by Emir of Qatar Sheikh Tamim with Cybertruck Convoy
Strong Warning Issued: Do Not Use General Chatbots for Medical, Legal, or Educational Guidance
Saudi Arabia Emerges as Global Tech Magnet with U.S. Backing and Trump’s Visit
This was President's departure from Saudi Arabia. The Crown Prince personally escorted him back to the airport.
NVIDIA and Saudi Arabia Launch Strategic Partnership to Establish AI Centers
Trump Meets Syrian President Ahmad al-Shara in Historic Encounter
Trump takes a blow torch to the neocons and interventionists while speaking to the Saudis
US and Saudi Arabia Sign Landmark Agreements Across Multiple Sectors
Why Saudi Arabia Rolled Out a Purple Carpet for Donald Trump Instead of Red
Elon Musk Joins Trump Meeting in Saudi Arabia
Trump says it would be 'stupid' not to accept gift of Qatari plane
Quantum Computing Threatens Bitcoin Security
Michael Jordan to Serve as Analyst for NBA Games
×