S&P Global Ratings on Friday upgraded Egypt's long-term sovereign credit rating to 'B' from 'B-', citing ongoing economic reforms, stronger growth, and improving external balances. The outlook was stable, reflecting confidence in the government's policy direction despite persistent fiscal pressures. The agency said the upgrade reflected "reforms undertaken over the past 18 months," including foreign exchange liberalisation, which helped restore market confidence, spur GDP growth, and attract record foreign direct investment — most notably the $35 billion Ras El-Hekma deal with Abu Dhabi's ADQ. S&P said Egypt's GDP growth rebounded to 4.4 per cent in fiscal 2025 from 2.4 per cent the previous year and is projected to average 4.8 per cent between 2026 and 2028. The reforms, combined with the International Monetary Fund's (IMF) support, improved foreign reserves and balance-of-payments metrics, while easing external financing pressures. The stable outlook balances stronger growth and external metrics against high fiscal deficits and heavy debt servicing costs, the agency said. S&P forecasted Egypt's usable foreign reserves to rise to $42 billion by 2028, while interest payments as a share of government revenue are expected to decline from 73 per cent in 2025 to 49 per cent by 2028. S&P cautioned that the outlook could turn negative if reform momentum weakens, particularly on exchange-rate flexibility or state asset sales. However, a faster-than-expected improvement in debt metrics or a surge in foreign investment could trigger another upgrade. "We could consider raising our ratings if Egypt's net government and external debt positions improve much faster than we currently expect, perhaps via an accelerated pace of deleveraging or higher FDI supported by the planned sale of state assets." S&P says. "We could also raise the rating should policies to diversify the economy and open up key sectors to foreign investment benefit the Egyptian economy, including the quality of external financing." The rating agency noted that Egypt remains committed to its IMF-backed reform programme, which supports fiscal discipline, private-sector growth, and a reduced state footprint. It added that inflation is easing, averaging around 10 per cent through 2028, aided by recent rate cuts from the central bank. Despite regional tensions and high borrowing costs, S&P said Egypt's reform path, external backing from Gulf partners, and strong domestic financial sector underpin the country's improved credit profile. Attribution: Amwal Al Ghad English
