S&P Global Ratings has reaffirmed Egypt's 'B-/B' long- and short-term sovereign credit ratings for both foreign and local currencies, with a positive outlook.
 

The agency highlighted that this positive outlook reflects the potential for improvement in Egypt's external and fiscal standings. It also pointed out that the market-driven exchange rate system is expected to boost GDP growth and, in the long run, aid fiscal consolidation.
 

According to S&P, Egypt has taken significant measures over the past eight months to address its macroeconomic challenges. The agency cited the March exchange rate liberalization, combined with strong foreign direct investment (FDI), as key drivers of a market-based foreign exchange environment.
 

Furthermore, the agency emphasized that Egypt's commitment to maintaining a market-determined exchange rate, along with the expanded IMF program and external funding from donors and FDI, will support the country's growth, fiscal revenues, and resilience to external shocks. These factors, over time, should help reduce inflation and lower the government’s debt interest costs.
 

S&P also noted that increased FDI, alongside robust donor support and inflows from portfolios and remittances, is bolstering Egypt’s external liquidity and fiscal health. However, some FDI transactions may be one-time occurrences.
 

The agency pointed out that Egypt’s tight monetary policy and high interest rates since March have resulted in around 70% of government revenues being allocated to interest payments.

 

It also warned that maintaining large primary budget surpluses to meet IMF targets will be difficult, especially given the significant regional geopolitical risks affecting key sectors like tourism, gas, and Suez Canal revenues.