Here’s why Moody’s has upgraded Egypt’s credit rating

The credit rating agency Moody’s has upgraded Egypt’s long-term credit rating from Caa1 to B3, while maintaining a positive outlook.

This upgrade is supported by several factors, including the stabilization of the exchange rate against the US dollar, a sustained period of fiscal consolidation, and structural economic reforms that have successfully reduced public debt indicators.

The agency highlighted a track record of robust primary budget surpluses—which reached 4.9 percent of GDP in the 2026 fiscal year—as a key driver behind this decision.

Furthermore, efforts to mobilize revenue —combined with expenditure controls and adjustments to energy prices —have contributed to reducing total government debt to 81.8 percent of GDP as of June 2026, down from 95.2 percent three years earlier.

Economic strengthening

According to Moody’s, reforms initiated since the beginning of 2024 have also significantly strengthened the economy’s capacity to absorb exchange rate volatility.

The shift toward a flexible exchange rate regime and a tighter monetary policy has eliminated chronic foreign currency shortages, allowing official reserves to rise to US$57 billion by September 2026.

Egypt’s updated policy frameworks have shown their resilience in the face of regional geopolitical developments and rising global oil prices, preventing a sharp depletion of reserves.

Official foreign currency inflows—driven by tourism and remittances—have rebounded sharply, helping to offset the decline in Suez Canal revenues and the broader trade deficit in the hydrocarbons sector.

This continued positive outlook reflects expectations that sustained fiscal discipline could help reduce government debt and borrowing costs more rapidly than currently anticipated in the baseline scenario.

Further gains remain contingent upon potential divestments under the State Ownership Policy, as well as a prospective recovery in domestic energy production and maritime traffic.