Arab News: S&P Global has affirmed Egypt’s sovereign credit ratings at “B/B” with a stable outlook, citing strong momentum in macroeconomic reforms and improved external buffers.
In its latest report, the credit rating agency stated that the affirmation reflects a balance between Egypt’s reform progress over the past two years, its external buffers, and its medium-term growth outlook, against heightened risks from prolonged regional geopolitical tensions.
Credit rating agencies are closely monitoring Egypt’s reform trajectory as it works to strengthen external buffers and restore macroeconomic stability, even as regional tensions continue to pose risks to growth and investor confidence.
Earlier this month, Moody’s reaffirmed Egypt’s long-term sovereign credit rating at “Caa1” for both foreign and local currency obligations, while maintaining a positive outlook.
Moody’s attributed the rating to the country’s continued fiscal consolidation, improving external balances, and the government’s commitment to structural economic reforms.
In its latest report, S&P Global said: “Egypt is entering the conflict with stronger external buffers than in previous crises. Over the past 24 months, the authorities have implemented significant reforms, including liberalization of the foreign exchange regime — that have unlocked the International Monetary Fund and other donor support and attracted sizable FDI inflows from the Gulf Cooperation Council.”
It added: “Until the Middle East war started on Feb. 28, these reforms had supported strong growth in tourism receipts, diaspora remittances, and non-resident portfolio inflows, contributing to a sharp accumulation of international reserves to $52.8 billion as of March 2026.”
The analysis further said that recent reforms have supported Egypt’s macroeconomic stabilization, including efforts to reduce inflation and rebuild reserves, while maintaining fiscal consolidation.
Despite the resilience shown by economic activity, S&P expects real gross domestic product growth to moderate slightly to 4.7 percent in fiscal year 2025-2026.
According to S&P Global, Egypt’s credit rating could be upgraded if the nation’s net government and external debt positions improve much faster than expected via accelerated deleveraging or higher foreign direct investment.
“We could also raise the rating should policies to diversify the economy and open up key sectors to foreign investment benefit the Egyptian economy, including the quality of external financing,” said S&P Global.
On the downside, the rating may be downgraded if the government’s commitment to macroeconomic reform, including exchange rate flexibility, wanes and economic imbalances, such as foreign currency shortages, widen.
The report added that negative rating action will take place if the country’s already elevated interest costs put further pressure on government finances, or if current geopolitical tensions impair Egypt’s access to external markets and increase its cost of debt.
https://www.arabnews.com/node/2639636/business-economy
