S&P raises Egypt’s outlook to positive from stable, maintains B rating

S&P revised Friday Egypt’s outlook to positive on “rising reserves and strengthening economic growth,” with a B- sovereign credit rating maintained, reflecting wide fiscal and external deficits, high public debt, and low income levels.

This is the first upgrade to Egypt’s rating since May 2015.

S&P added that it expects political stability in Egypt to continue under Egyptian President Abdel Fattah al-Sisi, not foreseeing significant policy changes in the run-up to elections in early 2018.

According to S&P, the positive outlook reflects a “potential upgrade over next year” if Egypt continues to carry outs its reforms to support both investment and growth.

The country’s economic growth rate rose during the last quarter of 2016/17 to 4.8 percent, while the unemployment rate fell to 11.9 percent in 2017, compared to 12.7 percent in June 2016.

Last week, Egypt recorded its highest level of foreign reserves in its history, registering $36.702 billion at the end of October from $36.535 billion at the end of September.

Reserves have been climbing since Egypt signed an agreement for a three-year $12 billion loan with the International Monetary Fund (IMF) in November 2016, shortly after the country’s decision to float its currency.

Cairo has welcomed Standard and Poor’s announcement to raise Egypt’s outlook to “positive,” one year after the country was deemed “stable” by the agency in 2016, Al-Ahram reported Saturday.

In an official statement, Finance Minister Amr el-Garhy said on Saturday the shift in Egypt’s rating outlook was an important step in consolidating trust in Egypt’s economic reform programme.

“This will contribute in attracting more foreign investment to the country, and reduce the cost of financing to both the state and institutions, as well as the private sector,” the statement added.