This supported the effect of the base year in light of expectations of widespread stability in the currency exchange rate
In its report on Egypt, the agency expected a further decline in the inflation rate to 10.6% at the end of the next fiscal year 2026.
The inflation rate had declined for 5 consecutive months before recording an acceleration during the last two months, recording 26.4% in September from 26.2% in August due to the increase in gasoline, diesel and electricity prices.
Yesterday, Fitch raised Egypt’s long-term credit rating to “B” for the first time in 4 years, with a stable outlook in light of the abundance of foreign exchange flows and the recent reform measures, the most important of which is the flexibility of the exchange rate.
The International Monetary Fund had expected the growth rates of the Egyptian economy to reach 4.5% for the years 2024 and 2025, driven by huge investments in infrastructure and the energy sector.
Fitch raised Egypt’s credit rating to “B” from “B-” with a stable outlook.
The agency stated that foreign direct investment received support thanks to the Ras El Hekma deal that took place last February, in addition to non-resident flows into the debt market, and new financing by international financial institutions.
It is expected that the average foreign direct investment will reach $16.5 billion during the current fiscal year, with expectations of pumping new investments from Saudi Arabia, indicating that this will help finance the current account deficit.
The agency stressed that it has “somewhat greater confidence that a more flexible exchange rate policy will be more sustainable than it was previously.”
Source: RT
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**Interviewer:** Today, we have with us Dr. Sara El-Masry, an economist with a focus on Middle Eastern markets. Dr. El-Masry, Fitch recently upgraded Egypt’s credit rating to “B” with a stable outlook. What does this signal for the Egyptian economy moving forward?
**Dr. El-Masry:** The upgrade is certainly a positive indication of investor confidence in the government’s economic reform measures and the potential for growth in the near future. It highlights the importance of a flexible exchange rate and the inflow of foreign investments, which can bolster economic stability.
**Interviewer:** Given that the inflation rate had seen a spike recently, do you think the optimism surrounding this credit rating upgrade is justified?
**Dr. El-Masry:** That’s an important point. While there has been a decline in inflation over several months, we are witnessing an uptick due to rising costs in energy. This suggests that while the credit upgrade is encouraging, we must be cautious about inflationary pressures that could undermine economic gains.
**Interviewer:** Fitch mentions a predicted decline in inflation rates and an optimistic growth forecast. How realistic are these expectations, considering Egypt’s recent economic challenges?
**Dr. El-Masry:** The optimism from Fitch is rooted in significant structural reforms and anticipated investments, particularly in infrastructure and energy. However, it remains to be seen how external factors—like global economic conditions or fluctuations in oil prices—might impact these projections.
**Interviewer:** You mentioned external factors. Many people are discussing the sustainability of these reforms. Given the dependency on foreign investment and external financing, could this dependence pose a risk for Egypt’s economic recovery?
**Dr. El-Masry:** Absolutely, this is a crucial debate. While foreign investments are a lifeline for Egypt’s economy, over-reliance can create vulnerabilities, especially if global conditions change rapidly. It opens a discussion about the need for Egypt to develop resilient, home-grown measures to strengthen its economic foundations.
**Interviewer:** With these various perspectives in mind, do you believe the hopeful outlook presented by Fitch will resonate with the average Egyptian citizen, especially those feeling the pinch of inflation?
**Dr. El-Masry:** That’s a key question. The real challenge will be communicating the long-term benefits of these reforms to everyday Egyptians. Many may be skeptical or feel left out of the economic progress if immediate relief from inflation isn’t felt soon. This could ignite debates on whether the focus on credit ratings and foreign investment aligns with the daily realities of citizens.
**Interviewer:** Thank you, Dr. El-Masry. It’s clear that while Fitch’s upgrade brings a wave of optimism, the path towards economic stability is laden with complexities that must be navigated carefully. What do you think, readers? Do you believe that this credit upgrade will translate into tangible benefits for the citizens of Egypt, or does it merely reflect a cautious optimism in the face of ongoing challenges?
