Fitch rating agency accuses Egypt of being under pressure

Last Friday, Fitch Ratings downgraded Egypt’s rating by one notch from (B+) to (B), changing its outlook to Negative.

In a statement, the agency spoke of increased external financing risks in light of high financing needs and tightening external financing conditions, noting that Egypt’s high level of public debt continues to represent a major weakness in the rating.

In this context, Dr. Ahmed Mostafa, professor of business administration, economist, confirmed that the state in the era of Egyptian President Abdel Fattah El-Sisi approved an unprecedented economic reform plan to develop the national economy by achieving comprehensive and sustainable economic development. development in all sectors that would have been possible without the global economic crisis. The acute situation that the whole world is witnessing, starting with the outbreak of the Corona epidemic, going through the Russian-Ukrainian war, has led to the steady growth of the Egyptian economy.

Mostafa added in Al-Masri al-Youm that, despite this severe crisis that has affected all the economies of the world, especially the economies of large countries, and not just the economies of developing countries, including Egypt, where the total global debt has reached a sum equal to 303 The United States of America has the world’s first economic rating, a $31.4 trillion default risk on due date government debt, in addition to a string of bankruptcies and the closure of many US banks and banks, but the Egyptian economy has been stronger and more resilient in the face of these challenges.

He emphasized that there were no collapses in the Egyptian banking sector, nor any delays by the government in paying its obligations to others, except for an increase in gold reserves to $ 34.55 billion at the end of April last year, in addition to an increase in the budget for support and social protection in the country with 358.4 billion pounds to 529.7 billion pounds with a growth rate of 48.8%, which confirms the strength and durability of the Egyptian economy and its resilience despite these challenges.

And he continued: “What the international rating agencies Kfitch and Standard & Poor’s issue, and their negative attitude towards the Egyptian economy, is not true. $ 5.7 billion in just 6 months, which requires the constant issuance of official statements and a press conference in the presence of the international media in response to the negative statements of these institutions aimed at hindering the development of the Egyptian economy and putting pressure on the state, especially with regard to foreign investment and its capital inflow into the interior.

For his part, economic expert Hani Abul Photoh said in a statement to RT: “International credit rating agencies are one of the main institutions that assess the ability of countries and companies to pay their debts and maintain financial stability. Among the major credit rating agencies known throughout the world, can be called Fitch Ratings, Moody’s Credit Rating Agency, Standard & Poor’s Credit Rating Agency, Fitch Agency, Moody’s and Standard & Poor’s together form the so-called “Big Three” in the world of credit rating agencies and are one of the largest and most important credit rating agencies in the world.

He continued: “In truth, it cannot be said that international rating agencies enjoy absolute honesty in their work. While rating agencies follow strict criteria for determining credit ratings, they are not free from financial and political interests and biases.”

He explained: “Rating agencies may have commercial and financial relationships with rated institutions and this may affect rating decisions. In addition, some agencies have conflicting interests as some of them provide advisory services to rated companies, in addition to providing credit ratings, which raises questions about conflicts of interest.

He noted that it is important to note that credit rating agencies also face challenges in valuing complex assets such as mortgage-backed securities, which caused the global financial crisis in 2008. These agencies sometimes rely on insufficient or inaccurate information to make classification decisions, which can lead to classification errors.

It is worth noting that many fines and penalties have been imposed on international rating agencies, including:

1- US$1.4 billion fine to Standard & Poor’s in 2015 due to misclassification of mortgage-backed securities during the global financial crisis.

2- $125 million fine to Fitch in 2021 for providing misleading ratings to Chinese institutions.

3- €16.25 million fine against Moody’s in 2016 due to the delay in announcing the change in Greece’s sovereign debt rating.

4- Fitch was fined $3 million by the US Securities and Exchange Commission (SEC) in 2012 for failing to provide unbiased ratings for mortgage-backed securities.

These fines and penalties show that there are various challenges facing rating agencies and that it is important to monitor and oversee their performance in order to maintain the integrity and transparency of their ratings.

He concluded by saying that credit rating agencies strive to maintain the highest standards of honesty and transparency in their work, but they are not immune to the risks and issues that could affect their ratings.

Egyptian source today + RT

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