The Fitch credit ratings agency expects a decline in Egypt’s inflation rate on an annual basis during the second half of this year, due to the increase in the Base Year.
It explained in a report on Friday that the macroeconomic situation in Egypt will remain difficult during 2024-2025 as a result of relatively weak growth.
Adjusting the exchange rate would provide an incentive for the International Monetary Fund (IMF) to agree to an enhanced support program for Egypt, it noted.
The agency said that though Egypt will continue to face economic and financial challenges, the Ras al-Hikma deal – worth a total of US$35 billion – would ease external liquidity pressures and facilitate adjusting the exchange rate.
Economic expert Sherif Delawar explained that the size of the returns from the Ras al-Hikma project is huge, and this number must be treated with great importance while determining its method of use.
Delawar added that this deal mark the beginning of restoring confidence in the local currency, and that the target is managing inflation and prices for average citizen.
Banking expert Tarek Metwally said that the Ras al-Hikma project represents a crucial step, but at the same time is only the beginning of the long and arduous road to economic reform.
The impact of the Ras al-Hikma deal must not be underestimated, he added, and it is important to appreciate the efforts made in this project and encourage its completion.
Back in November, the agency reduced Egypt’s credit rating to “B-,” down from “B,” and attributed this to increased external financing risks and an increase in government debt.
It stated that the reduction reflects increased risks, and the already high trajectory of government debt.
