S&P Global Ratings affirms Egypt's credit rating at 'B/B' with stable outlook amid reform efforts and regional risks

S&P Global Ratings has maintained Egypt’s sovereign credit rating at ‘B/B’ with a stable outlook, acknowledging the country's ongoing reform efforts despite increasing risks from regional geopolitical tensions. The agency noted that the outlook balances improving economic fundamentals with potential downsides from prolonged conflict, which could impact foreign currency inflows. Egypt’s recent policy measures, including a more flexible exchange rate and broader macroeconomic reforms, have strengthened its external position and secured funding from the International Monetary Fund and other partners. These actions have boosted foreign currency inflows and increased international reserves to $52.8 billion in March 2026. However, S&P highlighted vulnerabilities such as Egypt’s growing reliance on energy imports and exposure to global commodity price fluctuations, projecting the current account deficit to widen to 4.8 percent of GDP in FY2025/2026. The report also pointed to heightened sensitivity to capital flows, with foreign portfolio outflows reaching approximately $10 billion after regional tensions escalated. S&P emphasized Egypt’s commitment to a market-driven exchange rate, noting the Egyptian pound’s approximately 13 percent depreciation since late February. While economic activity has shown resilience, S&P expects growth to ease to 4.7 percent for FY2025/2026 due to regional developments affecting trade, tourism, and investment. A downgrade could occur if reform momentum