Fitch Ratings said it had downgraded Egypt's long-term foreign currency rating from BB- to B+ with a negative outlook because of increasing uncertainties over the political future of the country. It also downgraded the long-term local currency rating from BB to B+, also with a negative outlook, while affirming the short-term foreign currency rating at B. The downgrade and negative outlooks "reflect increased uncertainties surrounding the political transition following (Thursday's) ruling by the Supreme Constitutional Court to annul parliamentary elections and dissolve parliament," a statement said. Whatever the outcome, "the political and policy-making process has been complicated, delaying the likely implementation of the comprehensive macroeconomic and structural reforms needed to kick start recovery and ease financing strains" said Richard Fox, head of Middle East and Africa sovereigns at Fitch. On Thursday, Egypt's transition to democracy was thrown into further disarray after its top court ordered parliament dissolved and allowed a disputed candidate to remain in a divisive presidential runoff due to take place Saturday and Sunday. Activists and political figures described the rulings as the final phase of a military coup that takes the transition back following the ouster last year of president Hosni Mubarak back to square one. Fitch said that, before the latest events, "the economic situation had shown some signs of easing with, in particular, international reserves rising slightly in April and May after several months of sharp decline.
