Egypt Daily News – Standard & Poor’s has affirmed Egypt’s credit rating at B, but downgraded its outlook from positive to stable.
The credit outlook reflects the agency’s expectations regarding a potential upgrade, downgrade, or maintenance of the rating within the next 12 months. A stable outlook indicates that maintaining the current rating is the most likely scenario.
S&P attributed the change in outlook to high domestic and external financing needs, which leave Egypt vulnerable to current global financial market volatility. It noted that Egypt is among the countries where interest payments consume a large portion of government revenue, while the balance of payments remains exposed to global financing conditions and fluctuations in hot money flows.
The agency explained that the stable outlook balances Egypt’s commitment to fiscal and economic reforms against challenges such as slowing global growth and volatile external funding conditions.
When could S&P upgrade Egypt’s credit rating?
S&P stated that an upgrade is possible if Egypt’s net government or external debt improves faster than currently expected — potentially driven by a combination of:
- Increased foreign direct investment (FDI)
- Government asset sales
- Stronger economic growth
Such improvements could also significantly ease the interest burden on the budget.
The agency expects Egypt’s public debt to decline to 84% of GDP by the end of the current fiscal year, down from 89.1% last year, and to continue falling to 82.9% by the end of the next fiscal year.
What could lead to a downgrade?
Standard & Poor warned it may lower Egypt’s credit rating if:
- There is a reversal in macroeconomic reforms, such as a retreat from exchange rate flexibility
- Economic imbalances like foreign currency shortages re-emerge
- High interest costs force the government to consider debt restructuring
- Geopolitical tensions or trade-related frictions limit Egypt’s access to external markets and increase borrowing costs
In essence, while the outlook remains stable for now, the path ahead depends heavily on Egypt’s continued reform momentum, external financing conditions, and geopolitical stability.
