S&P revises Egypt’s outlook to stable with ‘B-/B’ rating

S&P Global Ratings revised Egypt’s outlook to stable from positive while affirming its long- and short-term sovereign credit ratings at ‘B-/B’, citing persistent external vulnerabilities and high debt costs despite notable reform efforts.

The rating action reflects Egypt’s exposure to global financial volatility and significant financing needs. Although the country undertook major reforms—including exchange rate liberalisation and a $35 billion FDI deal with ADQ—elevated interest payments, which are forecast to consume 58 per cent of government revenues in FY2025, and growing external risks continue to weigh on the outlook.

S&P also highlighted that while Egypt’s macroeconomic policy reforms, supported by an expanded $8 billion IMF programme, are expected to drive growth and improve fiscal discipline through FY2028, downside risks persist. These include renewed currency shortages, reduced commitment to reform, or external shocks such as geopolitical instability or trade disruptions, notably the 10 per cent US import tariff introduced in April.

Economic growth 

Moreover, economic growth is forecast to rebound to an average of 4.1 per cent annually from FY2025 to FY2028 after slowing to 2.4 per cent in FY2024 due to inflation and limited foreign currency availability. The agency noted improving investor confidence and foreign reserve buffers, but warned that high borrowing costs and heavy reliance on short-term domestic debt remain structural weaknesses.

S&P acknowledged progress in privatisation and fiscal transparency, including Egypt’s plans to reduce public investments, enhance oversight of state projects, and transfer selected SOEs to the Sovereign Fund ahead of privatisation. However, it expects the pace of asset sales to remain slow.

Despite regional tensions, Egypt has maintained its neutrality and continues to play a humanitarian role. Its strategic importance has underpinned sustained support from Gulf countries, with Saudi Arabia and others pledging multi-billion-dollar investments.

Notably, S&P will consider an upgrade if net debt metrics improve significantly through stronger FDI, asset sales, or growth. Conversely, any reversal in reform momentum or debt distress could trigger a downgrade.

Attribution: Amwal Al Ghad English
Subediting: M. S. Salama