Egypt’s country risk is “improving” but “remains high in the medium term,” according to an emailed report from BNP Paribas. The report points to economic reforms, including the EGP flotation and fiscal reforms, as moves that have triggered positive momentum. Renewed private capital inflows also “signal a return of confidence among investors.” BNP Paribas says that given scheduled financial support, there is “a better country-risk outlook for the next 18 months. In the medium term, several trends are encouraging: The coming on stream of a new gas field will save a substantial part of the energy bill, some large companies could gain export market shares and the large and growing Egyptian market is a source of substantial economic growth.”

BNP Paribas says medium term risk is “high” because of three factors. First, social pressure exists in a context of the sharp rise in inflation. Second, the continued fiscal and current account deficits, especially external accounts, remain fragile and dependent on foreign capital inflows. The third set of risk factors is external as regional political tensions remain high, exposure to changes in commodity prices, and the vulnerability of capital flows to emerging markets. Assuming the reform process continues, the improvement of country risk in the medium term will depend on “curbing inflation, generating economic growth and external financial support.”

Omm El Donia’s economic reform program unfolding just fine for now, says IMF mission chief for Egypt Chris Jarvis, adding that the Finance Ministry and Central Bank of Egypt have been implementing the policies agreed upon with the Fund. Jarvis’ statements to Al Borsa follows meetings between Finance Minister Amr El Garhy and an IMF team in London over the weekend to discuss the government’s progress on the reforms. An IMF delegation is due to visit in April to review progress on the reforms to which we’ve committed before the fund disburses the second payment of the USD 12 bn bailout package.