DUBAI: Egypt’s government financial position remains a key hurdle in the country’s reform momentum, ratings agency Moody’s Investors Service said in an annual report on Wednesday.
Egypt’s credit profile – at B3 stable – reflects its large and diversified economy and strong reform momentum, set against constraints which include its very weak government finances, the ratings agency said.
“Any signs of reform slowdown would jeopardize the stable outlook. Depending on the form and speed of reversals and the implications for government finances and external liquidity this could even lead to downward credit pressure,” Moody’s said.
Moody’s estimates that Egypt’s general government primary deficit has been cut to 1.8 percent of GDP in fiscal year 2017, which ended on June 30, from 3.7 percent the year before and will start to show small surpluses from 2019.
For the fiscal year 2018, the ratings agency said the deficit would be at 10 percent of the GDP, slightly higher than the projected 9.2 percent but down from an estimated 12.1 percent in 2016.
“Although Egypt’s economic growth is still below pre-revolution levels, it has started to pick up, and investor sentiment has also improved on the back of strengthened reform momentum,” said Steffen Dyck, a Moody’s Vice President – Senior Credit Officer and co-author of the report. “We also expect that Egypt’s high fiscal deficits and government debt levels will gradually reduce.”
Preliminary official figures suggest real GDP growth of 4.2 percent in 2017, and Moody’s expects a further acceleration to 5.0 percent in 2019, supported by the government’s structural reforms, Moody’s noted.
Egypt’s implementation of economic and fiscal reforms underscored the government’s effectiveness and policy predictability, inasmuch as risks to policy-making have been greatly reduced since last year due to better inter-agency cooperation.
Positive pressure on the rating would stem from faster-than-expected progress on the government’s reform program, more rapid fiscal consolidation and improvements in debt metrics, Moody’s said.
Egypt’s weak government finances remain key hurdle in reform momentum — Moody’s
Egypt’s weak government finances remain key hurdle in reform momentum — Moody’s
Closing Bell: Saudi benchmark index closes lower at 10,540
RIYADH: Saudi equities ended Wednesday’s session lower, with the Tadawul All Share Index falling 55.13 points, or 0.52 percent, to close at 10,540.72.
The sell-off was mirrored across other indices, with the MSCI Tadawul 30 Index retreating 5.79 points, or 0.41 percent, to close at 1,393.32, while the parallel market Nomu slipped 74.56 points, or 0.32 percent, to 23,193.21.
Market breadth remained firmly negative, as decliners outpaced advancers, with 207 stocks ending the session lower against just 51 gainers on the main market.
Trading activity moderated compared to recent sessions, with volumes reaching 123.5 million shares, while total traded value stood at SR2.72 billion ($725.2 million).
On the sectoral and stock level, Al Moammar Information Systems Co. led the gainers after surging 9.96 percent to close at SR172.30, extending its rally following a series of contract announcements tied to data center and IT infrastructure projects.
Al Masar Al Shamil Education Co. climbed 4.89 percent to SR27.48, while Naqi Water Co. advanced 3.36 percent to SR58.50. Al Yamamah Steel Industries Co. and Al-Jouf Agricultural Development Co. also posted solid gains, rising 3 percent and 2.86 percent, respectively.
Losses, however, were concentrated in industrial names. Saudi Kayan Petrochemical Co. fell 3.67 percent to SR4.73, while Makkah Construction and Development Co. slid 3.44 percent to SR80.
Saudi Tadawul Group Holding Co. retreated 3.28 percent to SR147.50, weighed down by broader market weakness, and Saudi Cable Co. declined 3.18 percent to SR143.
Alkhaleej Training and Education Co. rounded out the top losers, shedding just over 3 percent.
On the announcement front, BinDawood Holding announced the signing of a share purchase agreement to acquire 51 percent of Wonder Bakery LLC in the UAE for 96.9 million dirhams, marking a strategic expansion of its food manufacturing footprint beyond Saudi Arabia.
The acquisition, which remains subject to regulatory approvals, is expected to support the group’s regional growth ambitions and strengthen supply chain integration.
BinDawood shares closed at SR4.68, up 0.43 percent, reflecting a positive market reaction to the overseas expansion move.
Meanwhile, Al Moammar Information Systems disclosed the contract sign-off for the renewal of IT systems support licenses with the Saudi Central Bank, valued at SR114.4 million, inclusive of VAT.
The 36-month contract is expected to have a positive financial impact starting from fourth quarter of 2025, reinforcing MIS’s position as a key technology partner for critical government institutions. The stock surged to the session’s limit making it the top gainer.
In a separate disclosure, Maharah Human Resources confirmed the completion of the sale of its entire stake in Care Shield Holding Co. through its subsidiary, Growth Avenue Investments, for a total consideration of SR434.3 million.
The transaction involved the transfer of 41.36 percent of Care Shield’s share capital to Dallah Healthcare, with Maharah receiving the full cash proceeds.
Despite the strategic divestment, Maharah shares closed lower, ending the session at SR6.12, down 1.29 percent.
