Fitch Ratings, a leading credit rating agency, has affirmed Egypt's long-term foreign currency sovereign rating at 'B', maintaining a stable outlook. This decision is based on expectations of relatively high economic growth and continued strong support from international and regional partners. Egypt's large economy compared to other countries in the same rating category also supports this rating.
Despite the affirmation, Fitch warned of several risk factors, including weak public finances, high debt servicing costs relative to revenues, and elevated external financing needs. The agency also highlighted the risks of inflation and geopolitical tensions. These factors could potentially impact Egypt's economic stability and creditworthiness.
According to Fitch, Egypt's economy has shown signs of resilience in the face of external pressures this year. The country's international reserves have increased by $5.5 billion in the first eight months of the year, reaching approximately $54.4 billion. This rise in reserves is a positive indicator of Egypt's ability to manage its external obligations.
The surplus of foreign assets at the Central Bank of Egypt also increased to around $19 billion in August, up by $5.6 billion during the first eight months of the year. This improvement in the country's external position is attributed to the flexible exchange rate policy and the return of hot money flows to the Egyptian market.
Fitch noted that Egypt's flexible exchange rate policy was tested during the recent conflict in the region, which led to an outflow of over $6 billion from foreign investments in government debt instruments. However, the agency observed that hot money flows returned quickly to the Egyptian market, supporting the gradual recovery of the Egyptian pound.
Looking ahead, Fitch expects Egypt's current account deficit to widen to around 5.1% of GDP in the 2025-2026 fiscal year. However, the agency also forecasts growth in tourism revenues by 10% and a 18% increase in remittances from Egyptian workers abroad during the same period. These inflows are expected to support Egypt's external position.
Fitch predicts that Egypt's economy will continue to show resilience, with GDP growth estimated at 5.1% in 2026, driven by improvements in tourism, manufacturing, and consumption. The agency also expects the public debt to decline to around 72% of GDP by 2028. These projections are based on Egypt's economic reforms and continued support from international partners.
Key points
- Egypt's credit rating affirmed at 'B' with a stable outlook by Fitch Ratings.
- Egypt's economy expected to grow by 5.1% in 2026, driven by tourism, manufacturing, and consumption.
- Public debt expected to decline to 72% of GDP by 2028.
