Standard & Poor's keeps Egypt's credit rating at B/B with stable outlook

CAIRO - 9 May 2021: In a move that enhances confidence in the Egyptian economy, Standard & Poor's credit rating agency has kept the sovereign rating of the Egyptian economy at the level of B / B in the long-term and short-term, while maintaining a stable outlook.

This stabilization was supported by Egypt's record in economic and financial reforms and macroeconomic stability, which led to the accumulation of foreign exchange reserves and high growth rates in the two years preceding the Corona pandemic, as well as Egypt's positive growth rates despite the global pandemic.

The agency added in its report that Egypt's foreign exchange reserves and access to domestic and foreign debt markets allow the government to cover high external financing needs and upcoming maturities.

Dr. Hala El-Said, Minister of Planning and Economic Development, said in a press statement that fixing the sovereign classification is important in light of the economic and financial turmoil the world sustains due to the outbreak of the Corona epidemic and the fact that the world is going through many structural changes in supply and value chains.

"The world is also going through a liquidity crisis that will affect countries' ability to access financial markets to finance development and sustainable growth," the minister pointed out.

El-Said added that fixing Egypt's sovereign rating confirms the merit of the Egyptian economy and its ability to emerge from the global crisis and restore high growth rates.

Credit ratings are an important tool that investors use when making decisions to buy bonds and other fixed-income investments and refer to the minimum return that investors demand on investing in state bonds, which must largely reflect the rating given to the country's sovereign risk.

The sovereign credit rating carried out by international credit rating agencies, the most important of which is the Standard and Poor's Corporation, is an assessment of the ability of governments to service their debts within the time frame of the maturity dates specified for these debts, taking into account the nature of the conditions agreed upon between the government and its lenders when contracting the loan.

Through the use of a set of macro indicators, this evaluation is converted in the form of a specific classification for the state. That evaluation reflects the sovereign risk for that state, which is, in fact, an assessment of the likelihood that a country will stop servicing its debt, meaning that the sovereign credit rating is devoted to the ability and desire of the state to respect its obligations towards lenders of various types.

The country's credit rating is always accompanied by the so-called Outlook, which reflects the rating agency’s assessment of the rating given to the country in the medium term (between one to three years), which generally takes one of three forms, which is a positive and positive, and reflects the institution’s optimism that will continue to improve prospects. The government's credit performance and the likelihood of an increase in its rating in the future are negative, and the pessimism of the corporation reflects the possibility of a continuous decline in the performance of the government and a decline in the rating granted to it in the future.