Moody's completes periodic review of Egypt

CAIRO – 15 December 2020: Moody's Investors Service (Moody's) announced completing the periodic review of a group of issuers, including Egypt.

“The credit profile of Egypt (issuer rating B2) is supported by "a3" economic strength, reflecting the country's large and diversified economy; "b1" institutions and governance strength that balances relatively weak but improving governance indicators with a solid track record of reform implementation over the past three year,” Moody’s noted.

It also referred to "ca" fiscal strength which reflects weak public finances with a high, albeit declining government debt burden after a temporary pandemic-related increase, and very low debt affordability; and "ba" susceptibility to event risk reflecting political risk, balancing a lower likelihood of social upheaval with persisting security risks in certain areas, as well as banking sector risk reflecting the relatively large size of the system and the potential for contingent liabilities accruing to the government's balance sheet, mitigated by the sector's stable funding structure, large liquidity buffers and resilient loan performance.

Earlier in September, Moody’s said in a report that Egypt's (B2 stable) credit profile reflects its sizable and diversified economy, large domestic funding base, and projected foreign exchange reserves that are enough to cover maturing external liabilities over the next three years.

It added that relatively low levels of foreign currency-denominated and external government debt also support Egypt's credit profile. 

Moreover, it said that declining inflation and credible monetary policies have also allowed the central bank to cut interest rates, which has contributed towards the gradual decline of governmental domestic borrowing costs.