The International Monetary Fund (IMF) has reported that Egypt has experienced net positive portfolio inflows, particularly into local currency bonds, in recent months. This is a positive development for the country, which has been grappling with debt and high inflation.
The IMF’s Global Financial Stability Report highlighted that Egypt’s debt has been on a downward trajectory, declining from 98% of GDP in the fiscal year 2022/2023 to a projected 89% in the 2023/2024 fiscal year. This indicates progress in managing the country’s national debt.
While emerging markets like Egypt have shown resilience, the IMF warns that maintaining financial stability will become increasingly challenging. Rising term premiums in several major emerging economies, driven by uncertainty surrounding global economic conditions, could pose risks.
The IMF’s projection that the Federal Reserve will reduce its policy rate by nearly 150 basis points by the end of 2025 may also impact global financial conditions.
Egypt’s ability to attract positive portfolio inflows despite these challenges is a sign of investor confidence. However, the country will need to remain vigilant and continue to implement sound economic policies to navigate future uncertainties.
