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Moody’s Raises Egypt’s Credit Outlook To Positive Following IMF Deal

March 9, 2024

Moody’s Credit Ratings Agency raised Egypt’s credit outlook to positive from negative in the wake of the country attracting foreign investment and currency from the International Monetary Fund (IMF) and other parties.

The rating agency affirmed that the positive outlook is also attributable to the change in economic policy, including the recent devaluation of the Egyptian local currency and interest rate increase.

On 6 March, Egypt announced that it had signed an expanded loan program with the IMF, increasing an existing loan program by USD 5 billion.

The move came in conjunction with the Central Bank of Egypt’s (CBE) decision to allow the Egyptian pound to trade freely after months of tightly managed rates. The Egyptian Pound plummeted in value against the US Dollar by up to 60 percent following the CBE’s decision.

“(It) reflects significant official and bilateral support announced and marked policy steps taken in the past week that will, if maintained, support macroeconomic rebalancing,” Bloomberg analyst Elisa Parisi-Capone said in a note.
On 5 October 2023, Moody’s downgraded Egypt’s credit scoring from ‘B3’ to ‘Caa1’ pointi
ng to the country’s worsening capacity to handle its debt. The downgrade can be attributed to Egypt’s severe economic crisis and increase in sovereign debt.

The downgrade from ‘B3’ to ‘Caa1’ meant that Egyptian government bonds carry a “substantial risk” — this is the lowest rating Egypt has ever been given by the agency.

In addition to the recent expanded loan from the IMF, Egypt signed a deal blah blah mention Hekma deal and value and note it is part of larger efforts, which include privatization, to attract foreign currency.

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