S&P upgrades Egyptian economy’s outlook to stable, lowers long-term credit rating

Cairo – October 22, 2023: International ratings agency S&P Global lowered Egypt’s long-term sovereign credit rating from B to B-, citing concerns over the country’s foreign currency shortage, delayed disbursements of multilateral funding, and debt sustainability.

S&P’s report explained that the downgrade was due to the delayed progress of Egypt’s structural reforms, as well as narrowed net foreign assets and the IMF’s postponed reviews.

However, S&P upgraded its outlook for the Egyptian economy from negative to stable and maintained its short-term B rating.

"Changing the outlook from negative to stable reflects structural reforms that the Egyptian government undertook recently which contributed to achieving financial discipline,” explained Minister of Finance Mohamed Maait in an official statement yesterday.

The minister emphasized Egypt’s commitment to implementing structural reforms and procedures, highlighting the government’s recent initiatives to eliminate tax exemptions for state companies and the privatization program’s progress.

S&P stated that it would raise the country’s ratings again once it implements further reforms to push competitiveness, growth, and fiscal outcomes, reducing net government debt levels and gross external financing needs.  “Under such a scenario, we would expect renewed bilateral and multilateral financial support,” S&P explained.

Egypt’s transfer and convertibility assessment rating was bumped up to B from B-. This assessment reflects the agency’s view on “the likelihood of a sovereign restricting nonsovereign access to foreign exchange needed to satisfy the nonsovereign's debt service obligations”.

In Q1 of FY2023/2024, Egypt recorded around $2.5 billion in stake sales, boosting foreign exchange inflows, the minister added.