Credit rating agency Moody’s announced early Friday its decision to maintain Egypt’s sovereign credit rating for both local and foreign currencies, along with a “negative outlook,” for an additional three months.
In its statement, the agency commended the recent government announcement regarding the sale of state assets and called for further reform measures.
Moody’s indicated that there is a likelihood of a new devaluation of the Egyptian currency by around 20%, which could elevate inflation levels and increase the costs of borrowing and government debt to a point that necessitates a credit downgrade.
However, the agency also praised the government’s ability to enhance revenue and improve primary surplus levels.
Furthermore, the agency anticipated more economic developments that would enable the International Monetary Fund (IMF) to conduct its delayed first and second reviews, paving the way for Egypt to secure the remaining financing.
This financing stands as a testament of investor confidence.
Egypt’s Finance Minister Mohamed Maait described on Friday Moody’s decision “a very positive decision.”
“We are working on achieving more reforms and structural measures during the coming months to deal with the current challenges facing the Egyptian economy in general and those referred to in the Moody's report,” he added in a statement.
Maait pointed out that Moody’s decision shows international institutions’ confidence in the Egyptian economy’s strength and resilience in light of the economic and financial policies and reforms implemented over the past years.
The minister added that Moody’s based its recent decision to continue the review for an additional three months on what the Egyptian government was able to take recently, including vital structural reforms that stimulate investment and support the improvement of the business environment and empower the private sector.
