Moody's downgrades Egypt's credit rating to Caa1 with stable outlook
Updated 10/8/2023 7:03:00 AM
Arab Finance: Moody’s Investors Services has lowered Egypt’s long-term foreign- and local-currency issuer ratings to Caa1 from B3, with a stable outlook, the agency announced on October 5th.
The agency also downgraded the country’s foreign-currency senior unsecured ratings to Caa1 from B3 and its foreign-currency senior unsecured MTN program rating to (P)Caa1 from (P)B3.
“The downgrade reflects the government of Egypt’s worsening debt affordability trend and the persistence of foreign currency shortages in the face of increasing external debt service payments over the next two years,” the credit ratings firm said.
The Central Bank of Egypt's (CBE) receipts of asset sale funds are expected to aid in restoring the economy's foreign currency liquidity buffer, according to Moody's.
The ongoing reform progress achieved under the International Monetary Fund (IMF) program will unlock financial support from other official lenders to alleviate liquidity risk, Moody’s added.
Commenting on Moody’s announcement, Minister of Finance Mohamed Maait said that Moody’s decision was based on the domestic and foreign challenges facing the local economy.
For his part, Deputy Minister of Finance Ahmed Kouchouk revealed that the government would proceed with its structural reforms in the coming few months.
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