11:36 p.m
Wednesday 08 February 2023
Moody’s credit rating agency
Cairo – Masrawy:
Moody’s, the credit rating agency, announced downgrading Egypt’s credit rating from B2 to B3, which media reports considered the first measure in nearly 10 years.
According to a report issued by the agency, the decrease in Egypt’s foreign currency reserves, the decrease in liquidity, and its ability to absorb external shocks, led to a downgrade in the rating, while the net foreign liabilities positions of the banking system increased, which increased weakness at a time of uncertainty about the global economy.
The agency revised Egypt’s future outlook from negative to stable.
The agency notes that while the renewed momentum of offerings achieved by the recent IMF agreement will create more sustainable sources of capital inflows, the process of reducing the country’s external vulnerabilities will take time.
“While the situation may stabilize, Moody’s does not expect liquidity in Egypt and its offshore centers to recover quickly,” it said.
The agency revised the outlook to stable, driven by its expectations that the government will be able to balance between rising domestic borrowing costs and tightening conditions in global capital markets in return for increasing social spending and its ability to achieve financial surpluses in the public budget.
She indicated that the implementation of the structural reforms stipulated in the International Monetary Fund agreement and the promotion of exports and foreign direct investment would support the agency’s expectations.