Arab Finance: Moody's Ratings has affirmed Egypt’s Caa1 long-term foreign and local currency issuer ratings and maintained a positive outlook, citing continued fiscal and external improvements supported by policy and reform measures, as per a press release.

The agency also affirmed Egypt’s foreign-currency senior unsecured ratings at Caa1 and its foreign-currency senior unsecured medium-term note (MTN) program rating at (P)Caa1.

It maintained the (P)Caa1 backed senior unsecured MTN program rating of the Egyptian Financial Corporation for Sovereign Taskeek, the government’s sukuk-issuing special purpose vehicle, along with a positive outlook.

Moody’s said the positive outlook, in place since March 2024, reflects expectations that Egypt will sustain recent fiscal and external gains, supporting an improvement in government debt affordability and a reduction in gross financing needs.

The government has maintained primary fiscal surpluses since fiscal 2024, while the central bank has focused on disinflation and external rebalancing.

At the same time, the agency noted that Egypt’s credit profile remains constrained by debt and external vulnerabilities, including exposure to oil price movements and global financing conditions that could lead to capital outflows.

These risks include a high government debt burden, weak debt affordability, and significant domestic and external refinancing needs, alongside contingent liabilities across the public sector.

Moody’s also pointed to the risk of social pressures if commodity prices affect real incomes, which could impact the continuation of current policy measures.

The agency kept Egypt’s local-currency ceiling at B1 and its foreign-currency ceiling at B3.