Following consecutive downgrades of Egypt’s credit rating by international ratings agencies, an upward trend has been witnessed since September 2014.

Fitch

On 20 June, Fitch Rating Agency confirmed its outlook on Egypt with a “B”, and a stable outlook on long-term foreign and local currency Issuer Default Ratings (IDR). Fitch expects a reduction in the country’s budget deficit, derived from stronger growth and the decrease in commodity prices. The deficit will however remain big, according to the agency.

Fitch sees an improved, more politically stable environment under President Abdel Fattah Al-Sisi, which reflects on an improved economic situation. The agency, however, did not overlook the fact that “significant sections of the population are disaffected”, namely in North Sinai.

In December 2014, Fitch upgraded Egypt’s rating to B from B-, with a stable outlook. In response, Minister of Finance Hany Kadry Dimian said it was the first time Fitch had lifted Egypt’s rating, following a series of low ratings over the past few years.

Meanwhile, prior to March’s Economic Summit, Fitch Director Paul Gamble told Daily News Egypt that Egypt is slowly reclaiming credit ratings it has lost over the years of political uncertainty and unrest. This is as the economy gradually responds to extensive revival attempts.

Standard and Poor’s

In May, international ratings agency Standard and Poor’s affirmed Egypt’s long and short-term foreign and local currency sovereign credit ratings at B-/B, putting the country’s outlook at “positive” instead of “stable”.

S&P said they could revise the outlook to stable if they think recently improved political stability is threatened by political strife that could hamper the economic recovery. Nonetheless, S&P revealed that its ratings on Egypt remain restrained by “wide fiscal deficits, high domestic debt, low income levels, and institutional and social fragility”.

Moody’s

On 15 July, Moody’s Investors Service changed the outlook for Egypt’s banking system from negative to stable. The upgrade confirmed Moody’s expectations that bank funding and liquidity will “remain strong”, whilst improving operating conditions over the next 12-18 months. In May, Moody’s provided a B3 counterparty risk assessment to the National Bank of Egypt (NBE), Banque du Caire and Banque Misr.

The first positive achievement for Egypt after Moody’s decreased the Egyptian credit five times in succession following the 25 January Revolution came in April, when it raised the country’s credit rating to B3. Moody’s also estimated a decrease in Egypt’s budget deficit to 10% of GDP, and a decrease in public debt to less than 90% of GDP in FY 2014/2015.

In October 2014, Moody’s changed Egypt’s outlook from negative to stable, attributing the upgrade to the stabilised political and security situation. The agency said “the launch of government initiatives toward fiscal consolidation, signs of a growth recovery and an improvement in macroeconomic stability, and strong support from external donors” also attributed to this improvement.

The high fiscal deficits and government debt, as well as the “very large” fiscal borrowing needs, led Moody’s to confirm the government bonding rating at Caa1, however.

“The affirmation of the Caa1 rating reflects the very weak and challenging state of Egypt’s government finances. Budget deficits remain wide, at more than 10% of GDP,” Moody’s said.  “Government expenditure is marked by a very high share of recurrent spending, which limits room for public investment.”

Timeline of Egypt’s economic ratings since 2011

– 28 January 2011: Fitch revises its outlook for Egypt to negative.

– 31 January 2011: Moody’s downgrades Egypt’s government bond ratings to BA2 from BA1, and changed the outlook from stable to negative.

– 1 February 2011: Standard and Poor’s cuts Egypt’s long-term foreign and local currency ratings by one notch, to BB and BB+ respectively, both with a negative outlook.

– 3 February 2011: Fitch lowers Egypt’s debt ratings by one notch to BB from BB+.

– 16 March 2011: Moody’s downgrades Egypt’s foreign and local currency government bond ratings by one notch to Ba3 from Ba2. The outlook on these ratings remains negative.

– 18 October 2011: S&P cuts Egypt’s long-term foreign currency sovereign credit rating to BB- from BB, and its long-term local currency rating was cut to BB- from BB+. It maintained a negative outlook on the rating.

– 27 October 2011: Moody’s downgrades Egypt’s government bond ratings by one notch to B1 from Ba3. The outlook remains negative.

– 24 November 2011: S&P announces it has cut Egypt’s long-term foreign and local currency sovereign ratings to B+ from BB-, with a negative outlook.

– 21 December 2011: Moody’s downgrades Egypt’s government bond ratings to B2 from B1.

– 30 December 2011: Fitch cuts Egypt’s long-term foreign currency debt to BB- from BB with a negative outlook.

– 10 February 2012: S&P downgrades Egypt’s long-term rating from B+ to B. It affirmed the negative outlook.

– 15 June 2012: Fitch downgrades Egypt’s long-term foreign currency rating to B+ from BB-, with a negative outlook.

– 24 December 2012: S&P cuts Egypt’s long-term credit rating to B- from B, with a negative outlook.

– 30 January 2013: Fitch cuts Egypt’s sovereign credit rating to B from B+.

– 12 February 2013: Moody’s Investors Service downgrades Egypt’s government bond ratings to B3 from B2, and maintained the negative outlook.

– 21 March 2013: Moody’s Investors Service downgrade Egypt’s government bond ratings to Caa1 from B3. The rating outlook is negative.

– 9 May 2013: S&P lowers Egypt’s long-term credit rating to CCC+ from B-.

– 6 July 2013: Fitch cuts Egypt’s credit rating to B- from B.

– 17 July 2013: S&P maintains Egypt’s long-term sovereign credit ratings on Egypt at CCC+/C, with a “stable” outlook.

–24 July 2013: Moody’s confirms Egypt’s CAA1 government bond rating, while maintaining the ‘negative’ outlook.

– 15 November 2013: S&P raises its long-term foreign currency sovereign credit rating for Egypt to B-/B from CCC+/C, with a ‘stable’ outlook.

– 3 January 2014: Fitch raises Egypt’s economic outlook from ‘negative’ to ‘stable’. The rating firm, however, maintained its rating for the long-term foreign sovereign credit ratings at B-.

–16 May 2014: S&P affirms its ‘B-/B’ long-and short-term foreign and local currency sovereign credit rating assessment on Egypt.

-20 October 2014: Moody’s raises Egypt’s credit ratings outlook to stable from negative citing more stable political and security situation and signs of economic recovery.

-December 2014: Fitch upgrades Egypt’s rating to B from B-, with a stable outlook.

-April 2015: Moody’s raises the country’s credit rating to B3.

-May 2015: Moody’s provides a B3 counterparty risk assessment to the NBE, Banque du Caire and Banque Misr. S&P also affirmed Egypt’s long and short-term foreign and local currency sovereign credit ratings at B-/B, putting the country’s outlook at “positive” instead of “stable.

-June 2015: Fitch confirms its outlook on Egypt with a “B”, and a stable outlook on long-term foreign and local currency Issuer Default Ratings (IDR).