S&P Global raised Egypt’s credit rating by one notch on Friday, citing ongoing economic reforms that have spurred a sharp rebound in GDP growth.
Fitch Ratings, meanwhile, reaffirmed Egypt’s rating, highlighting the country’s relatively high growth potential and continued strong support from international partners.
According to Reuters, Fitch had last upgraded Egypt’s rating to ‘B’ in November 2024, a move supported by stronger finances fueled by foreign investments and tighter monetary policies.
S&P’s upgrade to ‘B’ marks the first since Egypt began receiving financial support around March 2024.
S&P noted that the country’s strategic importance has been accentuated by the conflict in Gaza, contributing to continued financial support from Gulf Cooperation Council members and other nations.
“We consider the risk from an escalation of tensions with Israel has increased only moderately over recent months, and energy collaboration continues to progress,” Fitch said in a statement.
Egypt’s annual inflation rate has fallen sharply from a record 38% in September 2023, aided by an $8 billion bailout programme from the International Monetary Fund in March 2024.
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S&P stated, “Given the stronger GDP growth prospects, increased revenue alongside expenditure control, and primary surplus targets tied to an IMF program, we expect fiscal consolidation to continue, albeit at a gradual pace.”
The agency added that, alongside the IMF programme, the commitment to a market-determined exchange rate should continue to support Egypt’s GDP growth and fiscal consolidation efforts over fiscal years 2025-2028.
S&P attributed the sharp rebound in GDP growth to reforms implemented over the past 18 months, including the liberalization of the foreign exchange regime, which has also boosted tourism and inward remittances.
Both S&P and Fitch maintained a ‘stable’ outlook for Egypt. Peer agency Moody’s has kept Egypt’s rating at ‘Caa1’ since October 2023, though it revised its outlook to ‘positive’ from ‘negative’ in March 2024, citing significant bilateral support and policy changes.
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Image Credit: Arab News
