Egypt’s stalled asset sales will add pressure on currency – Moody’s

Egypt’s stalled asset sales will add pressure on currency – Moody’s

As Egypt's targeted asset sales stall, currency depreciation pressures will continue to persist as the drawdown in foreign exchange liquidity resumed in January and February after reversing course over the year-end, according to Moody's Investors Service.

This adds downside risks to Egypt's debt affordability and debt sustainability profile.

The rating agency said progress with Egypt's (B3 stable) asset sale strategy--a key element of the $3 billion 46-month IMF Extended Arrangement concluded on 16 December 2022 aimed

at supporting foreign-currency liquidity--has been slower than anticipated.

The IMF's quantitative performance criteria target an improvement in the economy's net international reserves by $6 billion to about $23 billion in June from about $17 billion in March.

The agency calculated the net international reserves by subtracting the central bank's net foreign liability position at about $9 billion as of March from the economy's liquid foreign exchange reserves at $26.5 billion in March.

"The targeted adjustment under the IMF program is thus equivalent to a reversal in the central bank's net foreign liability position by $6 billion over the next three months, reducing it to about $3 billion by June."

The inability to improve the central bank's net foreign liability position and liquid foreign exchange reserves will continue to weigh on external