Fitch Ratings affirmed Egypt’s long-term FX issuer default rating at ‘B+’ with a ‘stable’ outlook. The outlook is supported by the country’s track record of fiscal and economic reforms, which authorities continued to enact, and a large economy, “which has demonstrated stability and resilience through the global health crisis,” the ratings agency said.

A better growth outlook: Fitch forecasts a real GDP growth rate of 3% in FY2020-2021, up from a grimmer 2.5% it had penciled in last July. Growth is then expected to bounce back to pre-covid levels in FY2021-2022 on the back of a recovery in tourism and Suez Canal shipping, supported by the global economic comeback, Fitch said. Inflation, which has recently been on a downward trend, is meanwhile see averaging 5% this fiscal year and 7% if FY2021-2022, levels that are “well below” FY2019-2020, which saw inflation exceed 13%.

Downsides? Fitch sees a risk in Egypt’s so-called “continued exchange rate rigidity.” It adds that we’re vulnerable to external capital outflows as foreign investors are holding more of the country’s debt as other factors weighing on Egypt’s credit outlook and macroeconomic stability. These include the fiscal deficit remaining large, and the government is running a high general debt-to-GDP ratio. Egypt is also getting weak governance scores as measured by the World Bank governance indicators.”