S&P Upgrades Egypt’s Credit Rating to ‘B’ with Stable Outlook

Global credit ratings agency Standard & Poor’s (S&P) has upgraded Egypt’s long-term sovereign credit rating to ‘B’ from ‘B-’, with stable outlook, citing the country’s ongoing structural reforms, stronger economic growth, and improved external indicators. 

In its report released late Friday, S&P said the upgrade reflects “the Egyptian authorities’ sustained implementation of reforms over the past 18 months,” which have bolstered fiscal discipline, stabilized the exchange rate, and supported GDP recovery.

S&P highlighted that Egypt’s economy has accelerated sharply, with real GDP growth reaching 4.4% in fiscal year (FY) 2025, up from 2.4% in FY2024. The agency projects average growth of 4.8% through 2028, supported by a rebound in investment, exports, and tourism.

“The decision to liberalize the exchange rate has improved competitiveness and enhanced the economy’s resilience,” S&P said, adding that the measure “restored investor confidence and encouraged stronger foreign capital inflows.”

The agency expects Egypt’s fiscal consolidation to continue gradually, underpinned by stronger revenue collection, restrained spending, and the government’s commitment to achieving primary budget surpluses in line with its IMF program.

“In light of stronger GDP growth prospects, higher revenues, spending discipline, and IMF-linked fiscal targets, we anticipate continued fiscal adjustment, albeit at a gradual pace,” the report noted.

S&P pointed to several key developments underpinning the upgrade, including higher tourism revenues and remittances from Egyptians abroad, both rebounding after years of volatility, and improved net financial inflows, which have strengthened Egypt’s external position.

A wave of foreign direct investment, particularly in real estate, highlighted by a $35 billion commitment from Abu Dhabi’s ADQ Holding for the Ras El Hekma coastal development project.

These factors, combined with continued backing from the IMF and other international donors, have helped rebuild confidence in Egypt’s economy. The agency expects usable foreign reserves at the Central Bank of Egypt to rise to $42 billion by 2028, marking a significant improvement from current levels.

S&P’s stable outlook suggests that Egypt’s credit metrics are expected to remain steady over the next 12 to 18 months, assuming continued reform momentum and external support. The agency cautioned, however, that downside risks persist due to high debt service costs, regional geopolitical tensions, and potential capital flow volatility.

Nonetheless, the report emphasized that Egypt’s policy consistency and its “demonstrated ability to attract large-scale investment” signal a positive medium-term trajectory.

Analysts view S&P’s move as a significant vote of confidence in Egypt’s reform agenda, following a similar decision by Fitch Ratings, which earlier this week affirmed Egypt’s credit rating at ‘B’ with a stable outlook, citing parallel improvements in inflation and external stability.