Fitch Ratings has upgraded Egypt’s long-term foreign-currency issuer default rating to ‘B+’ with a ‘stable’ outlook. The agency said that Egypt’s rating upgrade is supported by “further progress in implementing economic and fiscal reforms, which are driving improved macroeconomic stability, fiscal consolidation and stronger external finances.” These reforms, the ratings agency said, are expected to continue beyond the expiration of the IMF Extended Fund Facility. Barring renewed political instability or an unexpected negative shock to economic growth, Egypt’s outlook generally looks good, Fitch says. Tap or click here for the full report.

Fitch sees Egypt’s budget deficit narrowing to 8.6% of GDP during the current fiscal year, and the primary budget surplus recording 1.6%. The government is targeting a deficit and primary surplus of 8.4% and 2%, respectively. Interest payments are “likely to peak” in FY2018-19, when they are expected to come in at 10.2% of GDP, but will likely fall at least 1 percentage point in FY2019-20.

As for the next fiscal year, Egypt’s expenditures on wages, subsidies, and social spending are likely to drop on the back of what Fitch describes as “political commitment for further fiscal consolidation.” Government spending on wages in FY2019-20 is expected to drop to below 5% of GDP, down from 8% in FY2015-16, while subsidies and social spending should account for around 5.3% of GDP next fiscal year, down from 8% in FY2016-17. GDP growth should record 5.5% (which is slightly below the government target of 6%), while inflation is forecasted to come in at an average of 10% next fiscal year, “building in another round of subsidy reforms” in June and July of this year.

The ratings upgrade will increase investors’ confidence in Egypt and help drive down Egypt’s borrowing costs, Finance Minister Mohamed Maait said, according to a ministry statement. Vice Minister of Finance Ahmed Kouchouk stressed that Egypt remains committed to pushing ahead with the reform agenda, the statement says.