Business Today Egypt | October – November 2023, Special Edition

In Brief Egypt
S&P upgrades Egypt’s outlook to stable,
lowers long-term credit rating
International ratings agency Standard & Poor’s (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.
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.
Moody’s downgrades
Egypt’s rating from B3 to
Caa1, with stable outlook
Moody’s Rating Agency (Moody’s)
downgraded in October Egypt’s rating
from B3 to Caa1, with a stable outlook.
Moody’s attributed the downgrade to
the deterioration of the country’s ability
to bear debt and the ongoing shortage of
foreign currencies.
The agency said that the stable outlook is
due to Egypt’s continued access to financial
support from the International Monetary
Fund under an arrangement of $3 billion
over a period of 46 months.
Last May, Moody’s placed Egypt’s B3 long
term foreign-currency and local-currency
issuer ratings on review for downgrade.
Before this rating action, Egypt’s ratings
were B3 and the outlook was stable.
“The review period will focus on the
government’s ability to finalize the targeted
$2 billion in asset sales necessary to meet
the IMF program’s financing targets for
fiscal 2023 (ending June) and demonstrate
the viability of the program’s external
funding strategy that relies significantly
on asset sales,” the statement issued by
Moody’s read.
The rating agency is also placing the
review on the (P) B3 senior unsecured
MTN program rating of the Egyptian
Financial Corporation for Sovereign
Taskeek, Sukuk Company, and its B3 senior
unsecured rating.
www.BusinessTodayEgypt.com
November 2023
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