Moody’s Upgrades Egypt’s Credit Rating to B3 With Positive Outlook
On Friday, ratings agency Moody’s raised Egypt’s long-term sovereign debt rating by one notch from Caa1 to B3, assigning the nation a positive outlook. The upgrade reflects structural reforms and fiscal consolidation efforts that have placed public debt on a downward trajectory, though obligations remain elevated.
Egypt Cuts Food Subsidies to Counter Debt Crisis
Egypt has faced persistent debt crisis risks over recent years. To counter these pressures, the government engaged in extensive programs with international lenders, receiving an approximate eight billion dollar package from the International Monetary Fund.
The state curtailed broad food subsidy measures to reduce the financial burden of one of the world’s largest food assistance networks, which cost the government 2.75 billion euros last year. Inflation is projected to remain above 13 percent over the course of the year, following a peak exceeding 33 percent in 2025.
Moody’s noted that moving toward a flexible exchange rate and a tighter monetary framework enhanced the resilience of the national economy against external shocks. However, the agency cautioned that any slackening in government commitment to fiscal discipline would introduce immediate downward pressure on the credit rating.
EU Provides Support as IMF Projects Economic Growth
Alongside its engagement with the IMF, Egypt secured a 7.4 billion euro financial support package from the European Union, designated for the period spanning 2024 through 2027. In its World Economic Outlook report released on Tuesday, the IMF projected economic growth of 5.1 percent for Egypt this year, followed by 4.7 percent in 2027.
The international financial institution also anticipates a minor inflation rebound to 14.8 percent in 2027, ahead of a subsequent deceleration through 2028 and 2029. Moody's positive outlook indicates that continued policy implementation could reduce debt faster than initially forecast.