Moody's reviews impact of COVID-19 on Egypt's economy

 Moody’s Investors Service published a FAO on the impact of coronavirus on Egypt’s event risk, public finances and longer-term credit trends.

Here is the full transcript of Moody’s report:

Egypt's (B2 stable) large funding requirements and weak debt affordability expose its credit profile to a sharp tightening in financing conditions triggered by the coronavirus outbreak. However, improvements in governance and policy effectiveness in recent years shore up the sovereign's resilience to the current shock. In this report, we answer questions about the pandemic's impact on Egypt's cyclical and longer-term credit trends.

How is the shock impacting Egypt's liquidity and external risks? The shock has triggered capital outflows, but like in 2018 the domestic market has mostly absorbed the shortfall. Reforms since then and sufficient liquidity in the banking system will limit a rise in borrowing costs akin to 2018, but a temporary return to shorter maturities and larger borrowing requirements will increase rollover risks. External risks will remain relatively contained because foreign-exchange reserves, which have been boosted by a recent eurobond and access to official lending, sufficiently cover the economy's external liabilities over the next few years.