Moody’s upgrades Egypt’s sovereign issuer rating

Ratings agency Moody’s has upgraded its outlook on the Egyptian government’s long-term issuer ratings from stable to positive and also affirmed its B3 issuer ratings.

The change in outlook reflects “continuing structural improvements” in fiscal and current account balances as a result of a home-grown and IMF-backed economic reform plan, according to Moody’s vice president and senior analyst Elisa Parisi-Capone.

“Moreover, early signs of business environment reforms offer the prospect of a sustainable, inclusive growth path capable of improving competitiveness and absorbing the country’s rapidly expanding labour force,” she added.

The affirmation of Egypt’s B3 rating balances the strength of its large and diverse economy against its very pronounced fiscal weakness reflected in a high debt burden and large annual financing needs, stated Moody’s.

In addition there is the probability of sudden political upheaval, which while low, could have significant implications and a change in economic policy.

Significantly, Egypt’s parliament recently approved a plan to establish the country’s first sovereign wealth fund as part of its economic reform plan.

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