Fitch Ratings has improved its outlook for Egypt’s Long-Term Foreign-Currency Issuer Default Rating (LFTC) to positive from stable, maintaining a B- rating, as detailed in their recent report on Friday.
Previously, in March, Moody’s also adjusted its perspective on Egypt’s economic future from stable to positive while keeping its B- credit rating intact.
Fitch’s upgrade is credited to recent positive developments in the Egyptian economy, bolstered by $57 billion in commitments from international financial institutions (IFIs). Key factors contributing to this improved outlook include the significant Ras El-Hekma deal with the UAE, the adoption of a flexible exchange rate, and stricter monetary policies. These measures have not only facilitated additional IFI financing but have also revived substantial non-resident investments in Egypt’s domestic debt market.
In February, Egypt entered into its largest-ever foreign direct investment agreement, worth $35 billion, with the UAE’s ADQ to develop Ras El-Hekma’s coastal zone, a project expected to generate around $150 billion in investment.
Moreover, Egypt secured further financial support including $6 billion from the World Bank, $8 billion from the European Union over three years, and an increased IMF loan, expanding from $3 billion to $8 billion through 2026.
Fitch anticipates that Egypt’s move toward greater exchange rate flexibility will prove more sustainable than before and believes that initial efforts to curb off-budget spending will help mitigate public debt sustainability risks.
