Arab Finance: S&P Global Ratings has revised its credit outlook on Egypt to positive from stable, while affirming its long- and short-term local and foreign currencies credit ratings on the country at “B-/B”, according to a press release.

“We see the exchange rate liberalization, alongside Egypt's stated commitment to stick to ambitious budgetary consolidation targets, as a key step in shoring up confidence and growth in Egypt's economy and its debt sustainability,” S&P Global said.

The agency mentioned that the positive outlook reflects the possibility of further improvement in the country’s external situation and mitigation of the foreign currency shortfall.

Furthermore, it shows that a foreign exchange rate set by the market will help foster the gross domestic product (GDP) growth and over time back the government's fiscal consolidation plan.

S&P projects the Egyptian economic growth to weaken to about 3% in 2024, given the limited foreign currency liquidity, high inflation rate, and tight monetary policy. However, it expected it to rebound starting 2025.

It also expects Egypt's current account deficit to shrink over the period until 2027; however, the government deficit for 2024 will increase, mostly due to higher debt servicing costs.

Moreover, the rating agency forecasts Egypt’s inflationary pressures to remain high after the exchange rate adjustment; yet to be moderate over the period until 2027.