Fitch affirms Egypt’s rating at B+, with ‘stable’ outlook

Fitch Ratings has on Monday affirmed Egypt’s long-term foreign-currency issuer default rating (IDR) at ‘B+’ with a stable outlook.

“Egypt’s ratings and Outlook are supported by a recent track record of fiscal and economic reforms, policy commitment to furthering the reform programme and ready availability of fiscal and external financing in the face of the COVID-19 pandemic.” the rating agency said in a statement.

However, Fitch said the ratings are constrained by “still large fiscal deficits, high general government debt/GDP and weak governance scores (as measured by the World Bank governance indicators), which underline political risks.”

The coronavirus shock is negatively affecting Egypt’s external finances, GDP growth and fiscal performance, according to Fitch.

“We currently view the shock as a material but possibly temporary disruption to what were previously strong positive trends.”

“The reforms in recent years have provided Egypt with a degree of flexibility to weather this shock at its current rating. Nonetheless, the pandemic still presents risks to Egypt’s credit metrics depending on the duration of the global health crisis.”

Fitch’s proprietary SRM has assigned Egypt a score equivalent to a rating of ‘B’ on the long-term foreign-currency (LT FC) IDR scale.