S&P Lowers Egypt's Credit Outlook to Negative

By Stephen Nakrosis

S&P Global Ratings lowered its outlook on Egypt to negative from stable and affirmed their 'B/B' long- and short-term foreign and local currency sovereign credit ratings.

S&P said its outlook reflects risks that policy measures implemented by the country's authorities "may be insufficient to stabilize the exchange rate and attract foreign currency inflows to meet the sovereign's high external financing needs." While they expect the country's funding needs will be by multilateral and bilateral lenders, the "risks to the disbursement of funds have increased."

S&P said it estimates the Egyptian government allocates over two-fifths of all revenue collected for interest payments, adding "most of these payments service domestic debt rather than external obligations." Reducing the high interest to revenue ratio will be "a significant challenge," S&P said.

Further, S&P said delayed currency and structural reforms are pressuring the Egyptian pound and increasing the risk of "further sharp currency devaluations, higher inflation, and rising interest rates."

Write to Stephen Nakrosis at stephen.nakrosis@wsj.com

(END) Dow Jones Newswires

April 21, 2023 17:13 ET (21:13 GMT)

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