Cairo – Egypt: Moody's Investors Service (Moody’s) has changed Egypt’s long-term foreign and local currency issuer ratings to “B2” from “B3” with a stable outlook.

The new rating reflects Moody's expectation that ongoing fiscal and economic reforms will support a gradual improvement in the North African country’s fiscal metrics, and boost growth of the real gross domestic product (GDP), the US-based rating agency said in a statement late on Wednesday.

“Moody's increasing confidence that factors such as Egypt's large domestic funding base support its resilience to refinancing shocks notwithstanding the government's very high borrowing needs and interest costs,” the statement added.

The international rating agency said that the stable outlook balances the downside risks posed by very weak debt affordability and large financing needs alongside the longer-term challenges.

In the same vein, Moody’s has upgraded Egypt's foreign currency senior unsecured ratings to “B2” from “B3”, and amended its foreign currency senior unsecured MTN program rating to (P)B2 from (P)B3.

“Moody's has also changed Egypt's foreign-currency bond ceiling to B1 from B2, the foreign-currency deposit ceiling to B3 from Caa1, and the local-currency bond and deposit ceilings to Ba1 from Ba2. The short-term country ceilings for foreign-currency bonds and deposits remain unchanged at Not Prime (NP),” the statement highlighted.

Moody's said it forecasts a steady improvement in Egypt's fiscal metrics, albeit from very weak levels. It noted that maintained primary budget surpluses coupled with strong nominal GDP growth will contribute to slashing the general government debt/GDP ratio to below 80% by fiscal year 2020/2021 from 92.6% in FY17/18.

Egypt’s fiscal year begins in July and ends in June.