Fitch Upgrades Egypt’s Credit Rating Amid Economic Recovery Efforts

AFRICAN BUSINESS AND ECONOMYNovember 4, 2024 at 9:53 AM UTC

TLDR

Fitch Ratings upgrades Egypt's credit rating to B with stable outlook, citing reduced external risk, policy adjustments, and increased foreign capital inflows.
Egypt's economic stability supported by foreign investments, non-resident debt market inflows, and international financing following major policy shifts.
Egypt's improved investor confidence post-upgrade signifies recovery from crisis, but ongoing challenges include IMF program implementation and regional instability.

Fitch Ratings has upgraded Egypt’s credit rating to B from B- with a stable outlook, marking the first positive change since 2019. This upgrade reflects Egypt’s reduced external risk, policy adjustments, increased foreign capital inflows, and a more flexible exchange rate, as detailed in Fitch’s statement on Friday.

Egypt’s economic stability has benefited from recent foreign investments, non-resident debt market inflows, and additional financing from international financial institutions.

These improvements follow Egypt’s major policy shifts, including a record interest-rate hike and a 40% currency devaluation in March to ease foreign currency shortages. The government has also launched a state divestment program and cut fuel and electricity subsidies to manage spending.

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Key Takeaways

Egypt’s upgrade by Fitch signals improving investor confidence as the country recovers from a prolonged crisis and a $57 billion global bailout. However, challenges remain, with authorities working to implement an $8 billion IMF program amidst regional instability. Egypt’s other credit ratings remain lower, with S&P affirming a B- with a positive outlook and Moody’s rating at Caa1. The government’s recent policy adjustments indicate ongoing efforts to attract foreign investment and stabilize the economy, as Fitch’s upgrade provides a critical boost for Egypt’s standing in international markets.

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