What:
Fitch Ratings remains cautious about upgrading Egypt’s credit rating despite recent positive economic developments. These include major agreements like the USD 35 billion Ras El Hekma deal, an expanded USD 8 billion International Monetary Fund (IMF) program, and the Central Bank of Egypt’s decision to shift the EGP to a flexible exchange rate regime.
Toby Iles, Fitch’s head of Middle East and Africa sovereigns, emphasized to Reuters that these developments were already factored into Egypt’s current rating and outlook.
Some Context:
Fitch downgraded Egypt’s credit rating to B- from B in November 2023, revising its outlook to stable from negative.
So What:
Fitch expressed concerns about the sustainability of Egypt’s reforms. The agency highlights the importance of reducing external vulnerabilities and maintaining a flexible exchange rate regime. However, skepticism remains regarding the durability of recent EGP gains and the country’s ability to manage its debt burden.
Now What:
Fitch plans to review Egypt’s credit rating in May, although Toby Iles believes it’s too early to accurately assess the trajectory of the country’s public finances.
By the Way:
Moody’s, another major credit rating agency, holds a more optimistic view, recently upgrading Egypt’s outlook to positive based on expectations of improved macroeconomic stability driven by major agreements like Ras El Hekma.
