Cairo – Mubasher: Egyptian banks are expected to remain exposed to heightened medium-term risks, Fitch Ratings said in a recent report on Banque Misr’s credit rating.

The international credit rating agency affirmed the long-term issuer default rating (IDR) for Banque Misr at 'B+' with a stable outlook.

“Fitch's outlook for the operating environment remains negative. However, the near-term risks to Egyptian banks' credit profiles, and in particular to their foreign-currency (FC) funding and liquidity as a result of the fallout from the coronavirus crisis are receding.”

Egyptians banks have stable liquidity positions since July 2020 after a period of volatility in March and April resulted from large capital outflows.

"Some renewed investment portfolio inflows reported since July and the sovereign's external borrowings have supported the sector's foreign-currency (FC) liquidity."

The ratings agency expects Egypt’s current account deficit to expand to 5% of gross domestic product (GDP) in 2020 from 3.1% in 2019, which would continue to put pressure on foreign currency reserves which reached $38.4 billion at the end of August.

In addition, the country’s GDP growth is expected to slow down to 2.5% in 2021, compared to an average of 5.5% in 2018 and 2019.