S&P changes Egypt outlook to positive

12 November 2017

S&P Global Ratings has improved its outlook for Egypt because it may raise its ratings over the next year if Cairo continues to implement structural reforms to its economy.

The outlook has been changed to positive from stable and its short-term foreign and local currency sovereign credit ratings of B- and B have been affirmed.

S&P says that if further progress is made in improving the effectiveness of the monetary framework and inflation descends from its current high levels, the Central Bank of Egypt will be able to set interest rates more freely so as to influence demand and prices.

Alternatively, the ratings agency says it could revise its outlook down to stable if Egypt's plan to gradually reduce government debt-to-GDP is derailed by fiscal slippages, high borrowing costs, or there is a larger currency depreciation than expected, or if foreign exchange reserve levels were to fall significantly.

The outlook could also move to stable if the security environment worsens, hindering the recovery in investment and tourism.

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