Moody’s upgrades Egypt’s credit rating to B3 — The National
Moody’s Ratings has upgraded Egypt’s sovereign credit rating to B3 and assigned the country a positive outlook. The decision was linked to fiscal consolidation, structural reforms, improved revenue collection, and reductions in public debt and debt-servicing costs, The National reports.
Reforms and exchange rate
The B3 rating is still six notches below investment grade, but the upgrade moved Egypt out of the “substantial risk” category. Moody’s said that stronger revenue collection and spending restraint contributed to the progress.
Analysts also noted Cairo’s transition to a flexible exchange rate and tighter monetary policy. According to the agency, the monetary policy reform launched in March 2024 strengthened the country’s ability to withstand external shocks. The unification of the foreign exchange market and the flexible exchange rate, Moody’s said, reduced currency distortions, eliminated the chronic foreign currency shortage, and made it possible to adjust the exchange rate without depleting official foreign exchange reserves.
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Inflation and IMF support
Moody’s believes that higher growth rates, more effective revenue collection, and a faster decline in domestic borrowing costs if inflation eases and investor confidence grows could support a further strengthening of Egypt’s position.
At the same time, inflation stood at 13.9% in September due to higher energy costs. As a net energy importer, Egypt introduced fuel-saving measures after oil and gas prices rose as a result of the war in Iran. The agency noted that adjustments to domestic fuel and electricity prices, spending restraint, energy-saving measures, and targeted social support helped limit the fiscal consequences of rising commodity prices.
In July, Egypt gained access to about $1.8 billion in International Monetary Fund financing after completing another review of its extended economic programme. Last week, Fitch and S&P Global also affirmed their ratings for Egypt, citing the country’s economic progress.
