S&P Global Ratings has affirmed Egypt’s sovereign credit rating at B and its outlook at stable on the back of a “more competitive exchange rate, improving macro fundamentals and rising domestic gas production,” the ratings agency said in a statement on Friday. S&P expects fiscal challenges to remain under control and sees government debt gradually declining. “The stable outlook balances our expectation that Egypt’s current account deficits will now stay as a smaller percentage of GDP and that growth prospects will remain strong, against risks of fiscal slippages and an increase in the high stock of relatively short-dated government debt issued at high interest rates,” the firm said. S&P said it could raise the rating to positive if the country’s economic growth exceeded its expectations or if Egypt somehow works out a way to reduce its financing needs or government debt.

Egypt’s rating could risk a downwards revision if the plans to reduce the debt-to-GDP ratio are “derailed by fiscal slippages, higher borrowing costs, more pronounced currency depreciation than expected, or if foreign exchange reserve levels were to fall significantly.” A deterioration in the security environment and, by extension, investments and tourism, would also result in negative pressure on Egypt’s rating, it said.