The world is going through a recession, and many countries are on the verge of collapse. In a recent setback to Egypt, Fitch Ratings for the country have been downgraded further. The reason for the downgraded rating is said to be weaker external liquidity along with reduced prospects for bond market access. The new setback makes Egypt more vulnerable to global shocks and recession fears. Before this announcement, the outlook for Egypt was stable, but now the outlook has been changed to negative. The ranking stays at B+.
What is Egypt 3.1b Careemlatif Wahbabloomberg ?
It should be noted that there is a dip in the country’s foreign reserves. This can be attributed to various factors, including the rising energy cost. At present, foreign reserves of Egypt are only enough to cover the imports of only three months of the current external payment. Egypt also made a recent payment for the debt payment. What adds risk to the Egyptian economy is currency devaluation, a $ 3 billion loan deal, and interest rate hikes. Fitch also added that portfolio holding remains an area of concern for everyone.
As per an estimate, the current account deficit may narrow to 3.1% of the GDP in the present financial year. This is because of the recovery in tourism and gains from the higher shipping fee through Suez Canal. Fitch also added that Egypt could get strong international support, resulting in robust growth. This is the reason why the rating was not downgraded from B+. In addition, Fitch added that the political instability was also a risk for Egypt. There are weaknesses in government that lead to the structural problem, coupled with the high unemployment rate among the youth. Authorities are trying to mitigate the risk with social spending and economic reforms. So Egypt 3.1b Careemlatif Wahbabloomberg means Fitch Cut Egypt’s Outlook to Negative Because of Liquidity Crunch .
These challenges can be a bigger problem for Egypt, especially when most countries are going through turmoil. In such a case, the next few months can decide the country’s future. We hope that Egypt can mitigate the majority of its risk and doesn’t follow the path of other countries at risk of default.