I wonder what happens when banks receive a higher rating from international agencies such as Fitch? What does it mean if the rating of a bank like the National Bank or Banque Misr is raised? Is this just economic news or does it have a real impact on our daily lives? In this video, we will talk about something that could change the appearance of the Egyptian economy in front of the world… something that confirms that positive steps are taking place, and that the economy is on its way to improvement despite the challenges.
Fitch Agency, one of the largest credit rating agencies in the world, recently announced raising the credit ratings of four major Egyptian banks. These banks are the National Bank of Egypt, Banque Misr, Bank of Cairo, and Commercial International Bank – Egypt. The rating of the four rose from “B-.” to “B”. This simply means that the world’s confidence in the ability of Egyptian banks to face challenges has increased and that the economic situation has remained more stable
So, what made Fitch take this decision?
There are more than one reasons, the most important of which is of course the increase in liquidity in foreign currencies. The Egyptian government was able to provide greater dollar liquidity through a group of agreements, such as the Ras al-Hikma agreement, in addition to the support package from the International Monetary Fund… This means that the banks have become in a better position to deal with the needs of… Hard currency market.
Also foreign investments and remittances from Egyptians abroad… because authorizing new investments from foreigners, whether in debt instruments or in the market, in addition to remittances from Egyptians abroad, helped greatly in enhancing the cash reserve.
Then came the need for economic stability and strong growth. Fitch Agency indicated that the Egyptian economy has begun to become more stable and that the markets are witnessing very good growth rates despite the global challenges.
How does this affect us?
Raising the rating is not just news that is published on the pages of newspapers. It has a direct and indirect impact on the Egyptian economy and our lives… and of course an increase in international confidence… because when Egyptian banks’ ratings improve, foreign investors feel that dealing with the Egyptian market is safer, and this means new investments and more job opportunities.
Also, the stability of exchange rates.. Dollar liquidity contributes to the stability of the price of the Egyptian pound against foreign currencies, and this reduces pressure on prices and positively affects inflation.. Banks are able to provide more financing to local companies, whether large or small, and this increases productivity and creates new job opportunities.
The higher rating means that the Egyptian economy has a better outlook before the world. This not only attracts investments, but it also improves the reputation of the country as a whole.
Does this mean that all challenges are over?
Of course not.. Raising the rating is a positive step, but it is the beginning of the road. Egypt still faces challenges such as rising prices, controlling inflation rates, and continuing to attract investments.
Conclusion: Raising the credit rating of Egyptian banks from Fitch tells the world that Egypt is on the right path, and despite the challenges, it is taking serious steps to improve the economic situation… but the ball is now in our court, whether the government, the private sector, or even the ordinary citizen. We are all part of the journey to improve our economy… and this is what will make us able to overcome any challenge, no matter how big.
