Cairo - Mubasher: Fitch Rating said the possible IMF funding deal with Egypt would be credit positive for the country, but implementation risks are high and the country will continue to face several economic challenges.
Last Saturday, a delegation from the IMF has arrived in Cairo to starts negotiations regarding a multibillion bailout for Egypt. The country's Ministry of Finance said Egypt seeks a finance aid of around 12 billion through three years.
Fitch believes that such bailout could still fall short of Egypt's total financing needs, which it estimates could be closer to$10 billion annually, but a package would also likely stimulate some return of portfolio investment inflows.
But it also believes that, a deal would pave the way for further necessary currency devaluation in addition to speeding up fiscal reform and boost confidence in the economy, currently struggling with a budget deficit of close to 12% of GDP, mediocre economic growth and double-digit inflation.
Fitch said it assigns Egypt "B" rating with a Stable Outlook.
The 2015 current account deficit widened to close to 5% of GDP, constraining the Central Bank of Egypt's (CBE) foreign currency reserves, which were $17.5 billion at end-June 2016, compared with $37 billion at end-2010 before the 2011 uprisings.
