Uncertainty on the outlook of Egypt’s economy has driven Moody’s Investors Service last Thursday to downgrade the country’s sovereign foreign currency credit rating to Caa1 from B3, said a former senior official at the International Monetary Fund (IMF).
Having no clear economic plan, turning down an offer from the IMF to receive US$ 750 million emergency loan and having no other alternative financing sources have all blurred the future of the country’s economic situation, Dr. Fakhry El-Feky, former assistant to the executive director of the IMF affirmed.
The main purpose behind cutting the sovereign credit rating is alarming the country to its deteriorating political and economic conditions and sending signs to investors about the country’s situation. The Central Bank of Egypt’s (CBE) foreign reserves fell to US$ 13.5 billion and the government failed to find alternative financing sources, he added.
El-Feky rebutted that credit rating agencies are biased, affirming that these agencies have no interest to reduce the rating of a certain country as it cut the ratings of France and United States of America last year.
If the current regime does not intervene to end the current political strives, Egypt’s credit rating will be downgraded again, even with an economic reform plan, he warned.