International economic analysts forewarned that the continued reduction of Egypt’s credit rating will affect negatively governmental efforts on attracting more foreign funding for development projects in Egypt. Therefore, analysts called for implementing prompting procedures aiming at fostering trust in Egypt’s ability in repaying liabilities.
Ong Hiu, senior economic analyst at Norman Foundation for economic studies in Washington, said that S&P lowers Egypt’s credit rating by 5 grades from B+ to B due to the reduction of Egypt’s foreign reserves from US$ 36 billion in January 2011 to US$ 3.16 billion by the end of past January, noting that S&P’s negative rating came as a result of the continued sharp falling of foreign reserves and Egypt’s unclear political and economic statuses.
Hiu added that S&P would lower again Egypt’s credit rating, if the Egyptian government could not stop the declining foreign reserves, nor maintain stable monetary and financial statuses, stressing the positive effect of a smooth handover of power on supporting stability, investment and local currency in Egypt.
It is worth mentioning that Moody’s and Fitch lowered Egypt’s credit rating.