Moody’s places Egypt’s ratings on review for downgrade few days after Fitch’s view

Moody’s places Egypt’s ratings on review for downgrade few days after Fitch’s view

Prior to this rating action, the ratings were ‘B3’ and the outlook was ‘Stable’ as announced in February 2023.

Furthermore, the ratings agency placed on review for downgrade Egypt's ‘B3’ foreign currency senior unsecured ratings and its ‘(P)B3’ foreign currency senior unsecured MTN programme rating.

This is in addition to a review for downgrade the ‘(P)B3’ senior unsecured MTN programme rating of the Egyptian Financial Corporation for Sovereign Taskeek Sukuk company and its ‘B3’ senior unsecured rating which are “ultimately the obligation of the Government of Egypt,” in Moody's view.

The state-owned asset sale strategy which is a key component of the 46-month International Monetary Fund (IMF) programme that started in December 2022 witnessed slower than anticipated progress that risks undermining Egypt's financing plans, weakening the sovereign's foreign exchange liquidity, and eroding confidence in the currency.

Moody’s stated that the review period will focus on the Egyptian government's ability to finalise the targeted $2 billion in asset sales necessary to meet the IMF programme's financing targets for the current fiscal year that will end on 30 June 2023. The review process will also demonstrate the viability of the IMF programme's external funding strategy that relies significantly on asset sales.

The agency added: “The review period