Cairo – Mubasher: Fitch Ratings on Tuesday has upgraded Egypt's outlook to ‘Positive’ from ‘Stable’, while maintaining the North African nation's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'B'.

The international rating agency said Egypt's outlook revised to positive on the back of the "significant progress with its reform programme in 2017 and remains on track with the USD12 billion three-year Extended Fund Facility (EFF) signed with the IMF in November 2016."

The Central Bank of Egypt’s (CBE) exchange rate reforms have played an important role in Egypt’s economy and external finances, as the Arab world's most populous country’s macroeconomics returned to stability after the inflationary spike, according to Fitch’s report.  

“The IMF was positive about the budget for the current fiscal year ending June 2018 (FY18), while highlighting the risk from oil prices to outlays on fuel subsidies, and is broadly satisfied with the transition to a floating exchange rate regime,” the report showed.

Fitch expected that continued fiscal consolidation would result in reducing government debt/GDP in the fiscal year (FY) 2017/2018, noting that the primary deficit slid to 2.6% in FY 2016/2017 from 5.3% a year earlier.

The rating agency also forecast that Egypt’ budget deficit would narrow again to 9.7% in FY18 with a primary deficit close to balance.

It is also projected that Egypt would achieve a primary surplus by FY19 for the first time in more than 15 years.  

“We forecast general government debt/GDP to fall to 93% in FY18 from a peak of 103% in FY17, marking an inflection point in the strong upward trend since the 2011 revolution,” Fitch said.

International reserves have risen sharply, registering $37 billion in November 2017 from $19 billion in October 2016.