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Egypt's credit rating lowered as its foreign exchange reserves dropped

Posted on February 13, 2023 |

Moody's Analytics, reduced Egypt's sovereign rating from B2 to B3, noting the drop in its foreign exchange reserves and its reduced ability to absorb external shocks.

The agency reduced Egypt's local currency ceilings from PA2 to PA3 and does not expect liquidity to recover in Egypt and improve its external position quickly.

The strategy for selling state-owned assets declared by the government begins this month within the new IMF program, supporting the generation of sustainable non-debt capital flows to meet increased external debt service payments.

However, these measures will take time to reduce the risks of external vulnerability to Egypt and the government's ability to manage the effects of inflation and social stability has not yet been achieved.

From March 2022 to January 2023, Egypt reduced its currency exchange rate by 50% in several stages, from 15.7 pounds to the dollar, to 30 pounds now.

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