Egypt's Economic Roadmap: Navigating Sovereign Credit Challenges, Structural Reforms, and International Investments

Dr. Fakhry El-Fiky, Chairman of the Planning and Budget Committee in the Egyptian Parliament, answered several questions related to the Egyptian economy, including Egypt's sovereign credit rating, structural reforms, and the central bank's exchange rate policy.

Firstly, regarding the downgrade of Egypt's sovereign credit rating, it was expected due to rising risks caused by dollar shortages and external debt payments. Despite the downgrade, the future outlook for the Egyptian economy remains stable. Important indicators, such as achieving a surplus in Egypt's balance of payments, decreasing external debt by $662 million, and implementing structural reforms, have contributed to this stability.

Secondly, structural reforms in Egypt continue, focusing on enhancing the role of the private sector in economic activities. This involves legislation and executive decisions to support private sector growth. Additionally, the government plans to sell shares in state-owned companies through a program, including around 50 companies, some of which are public banks.

Thirdly, concerning the expected devaluation of the Egyptian pound against the dollar, there won't be a significant change due to the pound not being officially pegged to the dollar for about 70 years. The flexibility lies in linking the pound's exchange rate to a carefully selected basket of foreign currencies and gold, allowing slight fluctuations based on global market movements.

Fourthly, Egypt's request for additional deposits from Saudi Arabia and the UAE, totaling $5 billion, will bolster its foreign reserves. These deposits can be exchanged for direct investments in Egyptian companies, following a Debt or Deposit Equity Swap strategy.

Lastly, diversifying borrowing sources includes issuing Samurai and Panda bonds. The government has taken necessary measures to issue these bonds soon, with sufficient guarantees from international development partners, such as the African Development Bank and the Asian Infrastructure Investment Bank, in which Egypt is a founding partner.