Moody’s upgrades Egypt to B3 on fiscal reforms, keeps positive outlook

Moody's Ratings upgraded Egypt's long-term credit rating from Caa1 to B3 on Friday, keeping a positive assessment of the nation's fiscal situation. This move highlights a period of steady fiscal consolidation and structural economic reforms that have brought public debt metrics down. The rating agency pointed to an increasing streak of strong primary budget surpluses, reaching 4.9% of GDP in fiscal 2026, as the key factor behind the upgrade.

Efforts to boost revenue, coupled with spending cuts and adjustments in energy prices, helped bring total government debt down to 81.8% of GDP in June 2026, a significant improvement from 95.2% three years earlier. Policy changes implemented since early 2024 have markedly boosted the economy's resilience to foreign exchange shocks, with the shift to a flexible exchange rate regime and stricter monetary policy eliminating chronic foreign currency shortages and allowing official reserves to soar to $57 billion by September 2026.

These revised policy frameworks proved their strength during recent regional political upheavals and higher global oil prices, averting a significant depletion of reserves. The maintained positive outlook suggests that continued fiscal prudence could lead to a faster reduction in government debt and borrowing costs than previously projected.

Upgrades to the rating could be further boosted by potential sales of state-owned assets under the State Ownership Policy and potential upticks in domestic energy production and canal traffic.