Moody’s: Egypt’s Executive, Judiciary Conflict Fuels Political Uncertainty, a Credit Negative

In a ruling published on June 2nd, Egypt’s High Constitutional Court declared as unconstitutional the laws regulating elections to the Shurah Council, Egypt’s upper house of parliament, and the selection of members of the Constituent Assembly.

Rating agency Moody’s  said in its report the ruling is yet another standoff between the country’s executive and judiciary branches, adding to the political uncertainty that has undercut investor confidence, depressed investment and economic growth and stymied economic reforms.

In its report released on June 6th, Moody’s Investors Services forecasted that Egypt’s budget will likely incur a new deficit of 13% within the current fiscal year that will be ended by the end of this June.

Moody’s further said the estimated growth rates for the Egyptian economy have dropped to 2% instead of 3%, according to the International Monetary Fund (IMF)’s latest report.