Cairo – Mubasher: Moody's Investors Service changed the outlook on Egypt’s government to negative from stable and affirmed the 'Caa1' long-term foreign as well as local currency issuer ratings.
The rating agency also affirmed the Arab Republic's foreign-currency senior unsecured ratings at 'Caa1', according to a press release.
Meanwhile, the foreign-currency senior unsecured MTN programme rating was kept at '(P)Caa1'.
Furthermore, Moody's maintained the backed senior unsecured ratings of the Egyptian Financial Corporation for Sovereign Taskeek sukuk company at 'Caa1' and its programme rating at '(P)Caa1'.
The negative outlook highlights escalating risks that Egypt's credit profile will continue to weaken amid difficult macroeconomic and exchange rate rebalancing.
This comes despite an expected increase in financial support from the International Monetary Fund (IMF) and the government's continued commitment to primary surpluses
The outlook also underlines the risk that policy actions and external support may prove insufficient to prevent a debt restructuring due to the state's weak debt metrics and high exposure to foreign exchange and interest rates risks.
The affirmation of the 'Caa1' rating indicates the government's track record of fiscal reform implementation capacity that Moody's anticipates will unlock an enhanced financial support package from the IMF and other official lenders.
The report also indicated that the local-currency ceiling is unchanged at 'B1', while the foreign-currency ceiling at 'B3'.
Moody's placed the government of Egypt's ‘B3’ long-term foreign- and local-currency issuer ratings on review for downgrade last May.
In October 2023, the Central Bank of Egypt (CBE) directed the lenders operating in Egypt to halt the use of debit cards outside the African state. This was due to the foreign currency shortage in the country despite devaluing the Egyptian pound three times since the beginning of 2022.
