CAIRO: Moody's Investors Service says that political instability and transition in Egypt will continue to foster little investor confidence, setting Egypt's credit rating at a B1 negative. Moody's attributes continued instability and lack of investor confidence to the failure of Egypt's newly appointed governmental cabinet of ministers to address popular demands for a transfer from military to civilian rule. Furthermore, Moody's suggests that government debt has left banks vulnerable to increasing sovereign credit risk. “The economy is far worse that anyone can imagine,” said Egypt's teary-eyed Prime Minister Kamal al-Ganzouri on Sunday, stressing the need for stability and security in a televised press conference. He said that austerity measures were needed to pull Egypt out of its growing budget deficit, but vowed that no new taxes would be put in place. He also reasserted a cabinet decision to halt negotiations with the International Monetary Fund (IMF) for a $3.2 billion loan package proposed last summer, set to help the country tackle its growing budget deficit. The IMF predicts that Egypt's economy will grow only about 1.2 percent this year, compared to 5 percent growth in 2010. The nation's foreign reserves have plummeted to $20 billion, from around $36 billion at the end of last year. However, on Saturday, Central Bank Governor Farouk Al-Okdah said that reserves are still within safe limits. BM ShortURL: http://goo.gl/QpQtz Tags: Economy, featured, Investors, Moody's Section: Business, Egypt, Latest News
