Lower oil prices will benefit Egypt by providing “some degree of support” to its current finances, a recent report by Moody’s investors service said.
Egypt’s fiscal accounts and balance of payments would benefit the most from a lower oil price of $55 per barrel in 2015 and $65 in 2016, as forecasted by the firm, it added.
Though the Egyptian authorities expect official transfers to decline, Kuwait, Saudi Arabia, and the United Arab Emirates would “remain willing and able to support Egypt in case of emergency regardless of lower oil prices”, the report continued.
“The interest of foreign investors in Egypt’s oil and gas sector appears to remain strong despite lower oil prices. In general, foreign investment inflows should continue to improve, which will support foreign-exchange reserve stabilisation.”
Egypt’s hydrocarbon trade balance has been predicted to turn from a deficit into a surplus. However, lower oil prices will only have a limited positive impact on Egypt’s overall economic stability, according to the report.
“For fiscal 2015, we expect a current account deficit of 1.5% of GDP, though this is set to widen to 2.3% by fiscal 2016. While the hydrocarbon trade balance will turn from a deficit into a surplus, we expect that services and private transfer receipts will be only mildly negatively affected by lower oil prices,” analysts said.
