Egypt weathers COVID-19 blow but debt risks loom large

Significance

The IMF praised Egypt’s “resilience” to the COVID-19 shock and encouraged Cairo to maintain its focus on fiscal consolidation while broadening structural reforms -- mainly to ease investors’ access to key opportunities in the economy -- that will help “unleash Egypt’s enormous growth potential in the medium term”.

Impacts

• Egypt will need to go to the market again in 2021/22 through both conventional bonds and sukuk.
• The return of Russian tourists could generate USD3.5bn in revenues and is seen as critical to a recovery in the battered tourism sector.
• Egypt's inclusion in the FTSE Russell frontier index and JP Morgan’s emerging markets bond index could trigger large currency inflows.