Egypt is making further progress with its external rebalancing, Fitch Ratings says, as indicated by “rising foreign exchange reserves, a return of private capital inflows and currency appreciation.” Fitch adds that “further fiscal consolidation alongside external rebalancing would lay the groundwork for a broader-based improvement in sovereign credit metrics in 2018… However, challenges, including the risk of social unrest, are substantial. Even if the envisaged reforms progress smoothly, it would take several years to reduce gross general government debt to more sustainable levels.” It adds that the rebound in CBE reserves has been stronger than expected partly due to the larger-than-expected eurobond issuance. Fitch also believes that Egypt will broadly be able to meet its budget targets. Fitch worries about the prospect of high inflation rates that could “be politically sensitive, adding to the risk that social unrest will prompt the government to row back from some reforms.” The ratings agency projects GDP growth to increase to 4.5% in FY2017-18 from 3.3% a year earlier.