S&P upgrades Egypt debt rating on outlook

Consumer price inflation falls to 13.3% year-on-year in March

Ratings agency S&P upgraded Egypt’s debt grade by one notch on Friday, citing stronger economic growth and moderating inflation.

S&P raised Egypt’s sovereign credit rating to “B” from “B-” which is still below investment grade but further up the scale.

The ratings agency cited the improving economy, which is expected to average growth of 5.4 per cent over the next four years, reflecting “a more broad-based recovery and a slight move away from consumption” towards greater investment and net exports.

Consumer price inflation fell to 13.3 per cent year-on-year in March, the lowest level in nearly two years, the agency said.

However, Egypt’s debt ratings remain constrained by large fiscal and external deficits, high public debt and low income levels.

The country could earn a higher rating if growth outpaces forecasts, if external financing needs ebb and if reforms lead to lower debt, the statement said.

But negative pressure on the rating could come from an unexpected rise in debt or “if the security environment worsens, hindering the recovery in investment and tourism,” S&P said.

S&P raised Egypt’s sovereign credit rating to “B” from “B-” which is still below investment grade but further up the scale.