Fitch revises Egypt’s outlook to positive, affirms rating at ‘B:’ Ratings agency Fitch has revised Egypt’s long-term foreign currency issuer default rating to ‘positive’ from ‘stable’ and affirmed the rating at ‘B.’ Fitch says macroeconomic stability in Egypt is starting to improve from a fragile state. Public finances will remain a key weakness of the country’s credit profile, but expect continued fiscal consolidation to start to reduce government debt to GDP in FY 2018-19, the ratings agency says. Tap or click here for the full report.

This comes as Moody’s predicts that Egypt’s growth will accelerate to 5.0% in FY2019 and then to 5.5% by 2021 — the strongest growth rate in the Levant and North Africa region. In its regional outlook (pdf), Moody’s credits structural reforms with driving the economy away from a consumer-based growth model and towards a more diversified activity, with the EGP float increasing Egypt’s competitiveness. The flotation, coupled with new large gas finds in Zohr, will help further drive a structural improvement in the current account deficit to around 3.0% of GDP by 2021 from 6.8% in 2017.

On the other hand, the report predicts that fiscal consolidation in Egypt will be harder in the coming period, largely as a result of high inflation and interest spending at levels above 40% of GDP, which has led to led to an estimated deficit of 11% of GDP in 2017. The ratings agency expects the budget deficit to fall to 10% in 2018 and 8.5% in 2019. Continued fiscal consolidation will lower the debt-to-GDP ratio, which Moody’s expects will peak at 100% in 2017 and fall to 83% of GDP.

And what’s the biggest risk we face to this growth acceleration? You guessed it: it’s the election. Moody’s is running the same worn-out line as plenty of analysts that a government, which for the past four years has remained steadfast in its commitment to reform, might reverse course to win political favor in the very short months of the election cycle. Moody’s domestic political risk assessment remains at “High (-)”.

Commenting on the outlook change from Fitch, Finance Minister Amr El Garhy stated the move was crucial in helping to reduce Egypt’s borrowing costs while also bolstering confidence in Egypt’s economy. This is made more crucial as Egypt heads to the international bond market at the end of the month to sell USD 3-4 bn USD-denominated eurobonds. El Garhy assured that Egypt has the political will to continue with the reform agenda, according to a Finance Ministry statement.

Our reminder: President Abdel Fattah El Sisi will run. Nasserist (or at least soft-socialist) murmurings will be made by politicians of all stripes. The president will win a second term. The international press will kick the daylights out of us throughout the entire process (sometimes rightfully, but do you really think Egypt could do what KSA is doing right now at the Ritz and not already be under an international sanctions regime?) And in the end: Policy stability will prevail and we’ll remain the best place in the region to invest if your horizon is medium-to-long term.