Standard & Poor’s affirmed Egypt’s long-term and short-term sovereign credit ratings at B- and B, respectively, with a stable outlook, the ratings agency announced on Friday (paywall). Egypt’s ratings “remain constrained by wide fiscal deficits, high public debt, low income levels, and institutional and social fragility.” (This from the people who helped bring you the Global Financial Crisis…) S&P anticipates that the USD 12 bn IMF facility will support the country’s FX requirements over the coming years “and restore macroeconomic stability via gradual reform implementation over 2017-2020.” The ratings agency also predicts that macroeconomic obstacles such as persistent unemployment and poverty will challenge the implementation of reform measures.

S&P’s lowered its estimate of Egypt’s real GDP growth to 3.8% from 4.3% in 2015/2016, reflecting “the authorities’ tight fiscal and monetary stance and sluggish domestic demand.” Real GDP will maintain an average growth rate “just under 4%” until 2020, while economic growth over the next three years will be spurred by factors such as security improvements, stronger capital flows, improved eternal competitiveness on the back of the EGP float, and improved power supply from natural gas developments.

S&P’s says it could upgrade Egypt’s rating “if GDP growth picks up beyond our expectations, and if Egypt improves its fiscal and external positions substantially.” On the flipside, factors such as increased political risk, reduced funding from GCC countries, and a weaker institutional environment would cause Egypt’s ratings to be lowered. S&P’s unchanged ratings on Egypt comes days after Bloomberg’s Ahmed Namatalla and Ahmed Feteha said Egypt’s performance on the bond market warrants a credit upgrade.