Moody's Confirms Egypt's Long-Term Credit Rating at Caa1 with Positive Outlook

On Wednesday, February 19, Moody's affirmed Egypt's long-term foreign and local currency credit ratings at Caa1, maintaining a positive outlook.

The agency stated that its positive outlook, in place since March 2024, reflects the likelihood of improvements in Egypt's debt servicing burden and external position.

Moody's noted that, as anticipated during the last rating review, progress has been made in rebalancing Egypt's external and fiscal positions. Following the devaluation and flotation of the currency, Egypt now holds stronger foreign exchange reserves, and borrowing costs have begun to decline.

The agency also highlighted the growing credibility and effectiveness of Egypt's monetary policy. The Central Bank of Egypt has maintained a consistent monetary policy stance aligned with inflation targeting and a flexible exchange rate regime.

Moody's explained that this approach is expected to allow interest rates to decrease further, easing the debt burden while maintaining favorable conditions for stable foreign exchange inflows.

Moreover, the report noted the Egyptian government's ongoing efforts to enhance fiscal discipline and increase tax revenues, aiming to achieve a primary surplus of 3.5% of GDP.