Arab Finance: Fitch Ratings has affirmed Egypt's long-term Issuer Default Rating (IDR) at ’B’, with a stable outlook, according to the agency’s latest report.

The affirmation reflects Egypt’s higher foreign reserves and resilient economic growth, along with continued implementation of its economic policy framework.

Egypt’s gross international reserves rose to $54.4 billion in the first eight months of 2026, while the Central Bank of Egypt’s (CBE) net foreign assets (NFA) increased by $5.6 billion to $19 billion in August.

The banking sector’s NFA position remained broadly stable at $12.6 billion during the month, reflecting strong financing of the current account deficit through foreign direct investment (FDI) and external borrowing.

The rating agency highlighted that Egypt’s flexible exchange rate regime was tested following the US-Iran war, as foreign investors withdrew more than $6 billion from government debt holdings, about 1.4% of gross domestic product (GDP). This triggered a depreciation of more than 14% in the EGP against the US dollar.

Fitch estimates that Egypt’s current account deficit (CAD) widened to 5.1% of GDP in fiscal year (FY) 2025/2026 from 4.2% in FY2024/2025, as higher energy import prices weakened the trade balance.

Meanwhile, the agency expects Brent crude prices to average $79 per barrel in FY2026/2027, compared with $78 per barrel in FY2025/2026.

“We forecast the CAD will narrow below 3.5% of GDP by FY2027/2028, helped by tourism growth and an improved goods balance,” the report noted.

It added: “The authorities increased most fuel prices in March 2026, and we project they will do so again in Q4 2026.”

Hence, Fitch expects Egypt’s inflation to average 12.3% in FY2026/2027, up from 11.6% in FY2025/26, as higher global energy prices add pressure on domestic fuel and commodity prices.

As Egypt’s GDP growth accelerated to 5.1% in FY2025/2026, Fitch projects growth to moderate to 4.7% in FY2026/2027, as elevated inflation weighs on private consumption.