Fitch lowers Egypt’s rating and warns of the repercussions of the Israeli war Economy

Fitch Ratings lowered Egypt’s long-term foreign currency credit rating to “B-” from “B”, citing increased risks to external financing.

The credit rating agency also revised its outlook on Egypt from “negative” to “stable.”

The agency reported that the downgrade reflects increased risks to Egypt’s external financing, macroeconomic stability, and the trajectory of already high government debt.

She said that Egypt’s proximity to the conflict between Israel and the Palestinian resistance and the potential influx of refugees increases security risks, especially in the Sinai region.

The agency added that the war between Israel and Hamas poses major negative risks to tourism in Egypt.

She stressed that the expected revenues from tourism, the Suez Canal in Egypt, and the recovery of remittances from abroad will help contain financing needs due to the increase in imports.

On the seventh of last October, the Palestinian resistance was launched, led by Izz al-Din al-Qassam Brigades -The military wing of the Islamic Resistance Movement (agitation) -practical “Al-Aqsa Flood” Against the occupation.

On the 29th day of the Israeli war on… GazaThe occupation aircraft continued its intensive raids on the Gaza Strip, targeting several areas.

The toll of the war rose to 9,227 martyrs, including 3,826 children and 2,405 women, in addition to 23,000 injured, and more than 2,000 missing, according to the latest statistics from government media in Gaza.

Severe shortage of foreign currency

Last October, the international rating agency Standard & Poor’s downgraded Egypt’s long-term sovereign rating From “B” to “B-“, indicating increasing financing pressures on the country.

This reduction reflected the repeated delays in implementing monetary and structural reforms in the country.

During the past month also reduced Moody’s Credit Ratings assigned Egypt’s credit rating from “B3” to “Caa1” and attributed this to the deterioration of the country’s ability to bear debt.

Fitch: The war between Israel and Hamas poses major negative risks to tourism in Egypt

Egypt is facing an economic crisis amid record inflation and a severe shortage of foreign currency, and the rise in borrowing over the past eight years has made repaying foreign debt an increasingly burdensome burden.

Cairo imposed restrictions on imports in light of the shortage of foreign currencies, and at least two banks suspended the use of debit cards in pounds (the local currency) outside the country to stop the bleeding of currencies.

And it was Bloomberg Agency International Monetary Fund Executive Director Kristalina Georgieva was quoted as saying that Egypt will “bleed through” its precious reserves unless it devalues ​​its currency again, while praising other steps taken by Cairo – which is the Fund’s second-largest borrower – to correct its economy.

Monetary authorities have devalued the pound three times since early 2022, with the local currency losing nearly half of its value against the dollar.

What is the credit rating?

Credit rating For companies, banks, or countries, it means the creditworthiness, or the ability of those entities to obtain the necessary loans, and the extent to which they fulfill their obligations on time.

Classification levels

Classification levels Credit rating agenciesgetting between:

• Aaa is a “high security” rating, which is the highest credit rating, although it includes subordinate grades such as Aa or A.
• The “BBB” rating, which means medium creditworthiness, in its various degrees, is the same as the previous rating.
• CCC rating: “High Risk Creditworthiness”.
• The last classification is “DDD”: “distressed creditworthiness” and its grades are different as in the previous two classifications.