Moody’s affirms Egypt’s Caa1 rating with positive outlook

Moody’s Ratings has affirmed on Wednesday Egypt’s Caa1 long-term foreign and local currency issuer ratings, maintaining a positive outlook. The rating agency concurrently affirmed Egypt’s foreign-currency senior unsecured ratings at Caa1, and its foreign-currency senior unsecured MTN programme rating at (P)Caa1.

The decision reflects Egypt’s improved foreign exchange (FX) buffers following currency flotation and easing borrowing costs, alongside ongoing fiscal consolidation efforts targeting a primary surplus of 3.5 per cent of GDP.

“The positive outlook, in place since March 2024, continues to reflect the prospects for an improvement in Egypt’s debt service burden and external profile. As expected at the time of our last rating action, progress in external and fiscal rebalancing has been made. With the devaluation and flotation of the currency, Egypt has now stronger foreign exchange buffers, and borrowing costs have started to decline.

“Additionally, monetary policy credibility and effectiveness is increasing as the central bank maintains a policy stance consistent with inflation targeting and a floating exchange rate regime. This should allow policy rates to decline, bringing further relief on the cost of debt, while maintaining an environment favorable to steady foreign-currency inflows. The government’s efforts toward fiscal consolidation and enhancing tax revenues are also underway, aiming to achieve primary surpluses of 3.5 per cent of GDP.” the statement read.

Attribution: Amwal Al Ghad English

Subediting: Y.Yasser