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Arab Finance: S&P Global Ratings has affirmed Egypt’s sovereign credit rating at ‘B/B’ with a stable outlook, citing a balance between the country’s medium-term growth prospects and reform efforts against rising risks linked to a prolonged regional conflict, according to its latest report.
The agency pointed to stronger external buffers supporting the rating, including international reserves that reached $52.8 billion in March 2026 and a record net foreign asset position of $30 billion in the banking sector. Despite the EGP weakening by around 13% against the USD since the start of the conflict, the government has maintained a flexible exchange rate regime.
The stable outlook reflects Egypt’s continued commitment to an International Monetary Fund (IMF)-backed reform program, although S&P warned that progress is being offset by growing external pressures. The agency said a downgrade could follow any reversal of key reforms, particularly exchange rate flexibility, or a renewed widening of macroeconomic imbalances. It also highlighted higher borrowing costs and limited access to international markets as ongoing risks.
S&P expects Egypt to remain exposed to regional geopolitical shocks that could affect foreign currency inflows and raise import costs. It forecasts the current account deficit will widen to 4.8% of gross domestic product (GDP) in the current fiscal year (FY) 2025/2026, compared to 4.1% in its October estimate and 4.2% in FY 2024/2025.
Key sources of foreign currency, including remittances, tourism revenues, and Suez Canal income, remain under pressure. However, S&P noted that Suez Canal revenues increased 21% year-on-year (YoY) to around $3 billion in the first eight months of FY 2025/2026, compared to $2.5 billion a year earlier, with no material impact from the conflict so far.
As a net energy importer since 2023, Egypt remains exposed to potential disruptions in Israeli gas supplies, which account for about 60% of its gas imports and 15-20% of total consumption. The country is also vulnerable to global food and wheat price volatility, contributing to the wider current account deficit forecast.
The agency said foreign portfolio outflows are likely to remain elevated during periods of global risk aversion, noting that around $10 billion exited Egypt within one month of the conflict’s onset, compared to about $20 billion during the Russia-Ukraine war.
Despite some improvement in debt indicators, S&P expects Egypt’s gross financing needs to remain above 40% of GDP. General government debt is projected to decline to 89% of GDP by June 2026, from a peak of 94% in 2023, supported by growth, exchange rate stability, and easing domestic yields. The ratio is expected to fall further to 83% by June 2029.
S&P also expects Gulf Cooperation Council (GCC) countries to continue providing financial support, citing Egypt’s strategic importance. This includes major investments such as a $35 billion development project in Ras El Hekma and a $30 billion tourism project in Alam El Roum, alongside around $18 billion in deposits held at the Central Bank of Egypt (CBE), which are expected to remain until the IMF program concludes in December 2026.
Recently, Moody's Ratings affirmed Egypt’s Caa1 long-term foreign and local currency issuer ratings and maintained a positive outlook, citing continued fiscal and external improvements supported by policy and reform measures.
The agency also affirmed Egypt’s foreign-currency senior unsecured ratings at Caa1 and its foreign-currency senior unsecured medium-term note (MTN) program rating at (P)Caa1.
