More optimism on Egypt’s debt as Fitch sees Egypt’s fiscal debt narrowing to 6.4% of GDP by FY2019-20: Fitch Group’s Fitch Solutions (formerly BMI Research) also expects Egypt’s fiscal debt to narrow to 6.4% of GDP by FY2019-20, down from 9.4% in FY2017-18 on the back of “robust economic growth and fiscal reforms,” according to a report out yesterday. A projected increase in tax revenues and inflows from the gas sector, paired with the government’s continued subsidy cuts, will help increase government revenues while cutting down on expenditures, the firm said. Egypt’s public debt-to-GDP ratio is also expected to fall in the next fiscal year, reaching 78.6% of GDP, down from 84.3% of GDP this fiscal year.

The biggest risk to Egypt’s fiscal consolidation is the country’s debt composition and short debt maturity schedule, Fitch Solutions says. “Egypt’s debt maturity schedule is relatively short, heightening rollover risks. Indeed, 50.0% of the debt is set to mature by end-2020 and in an environment of tightening global financing conditions, this could leave the country more exposed to a jump in borrowing costs. Nevertheless, our core view remains for continued fiscal reforms and resultant positive investor sentiment to suppress such costs to some extent, helping to keep debt service broadly manageable for the government.”

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