Egypt’s stalled asset sales will add pressure on currency – Moody’s
- Date: 27-Apr-2023
- Source: Zawya
- Sector:Financial Markets
- Country:Egypt
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