Moody’s affirms Egypt’s B3 rating, outlook stable
Moody’s Investors Service affirmed the Government of Egypt’s B3 rating with a stable outlook, according to a statement on Friday, citing the initial IMF agreement as credit positive. “The rating affirmation is based on Moody’s view that the B3 rating appropriately captures Egypt’s credit risk profile, which faces a number of deep structural challenges reflected in very weak government finances, a fragile external payments position, and continued security risks,” the statement reads. However, the stable rating reflects that “despite the somewhat slower-than-expected implementation of fiscal and economic reforms over the past 12-18 months, upward and downward pressures on the rating are balanced… While reform momentum has slowed somewhat since April last year, the government has recently introduced another round of electricity price hikes, which together with the civil service law will help to keep current spending in check. The expected introduction of value-added tax and measures to improve tax compliance will help increase government revenues and support a gradual reduction in the government’s large fiscal deficit to 10% of GDP by fiscal year 2019, according to Moody’s estimates.”