October 17, 2026
On Friday, the credit rating agency Moody’s raised Egypt’s long-term default rating by one notch to the “B3” level compared to “CA-A1”, coupled with a positive outlook that opens the door to the possibility of raising the rating again in the coming months.
This step comes at a time when Egypt has been facing, for several years, structural challenges related to the debt crisis, which has placed it at the forefront of countries benefiting from major support programs of the International Monetary Fund through a financing package worth approximately eight billion dollars.
These loans are linked to a package of measures and commitments that the Egyptian government pledged to implement, and are primarily aimed at improving the public financial situation and ensuring the sustainability of public debt, as well as reducing the role of the state and military institutions in economic activity.
Moody’s explained that its decision is based mainly on these “structural reforms” and financial control measures, noting that they have contributed to putting the public debt and its interest burden on a downward path, despite it remaining at high levels. In this context, Egypt ended food support programs that were described as being too broad in scope, and which constituted a financial burden on the state treasury worth 2.75 billion euros, in conjunction with expectations that the inflation rate would record levels exceeding 13% on an annual basis during the current year, down from peaks exceeding 33% in 2025.
In its statement, Moody’s praised the efforts made to “increase revenue collection and rationalize spending,” considering them to be fundamental drivers of the progress achieved. She also pointed out that the transition towards a flexible exchange rate system and the adoption of a stricter monetary policy have strengthened the Egyptian economy’s ability to absorb external shocks.
On the other hand, the rating agency warned that any potential decline in the government’s commitment to the path of financial discipline, or a slowdown in the pace of reforms, may impose negative pressure on the credit rating in the future. Despite this, the agency justified its current positive outlook by saying that continuing the path of reforms may lead to reducing debt rates at a faster pace than initial expectations.
In connection with the matter, last Tuesday, the International Monetary Fund issued its global economic outlook report, expecting the Egyptian economy to register growth of 5.1% during the current year, and by 4.7% in 2027, with expectations of a slight increase in the inflation rate in 2027 to reach 14.8%, followed by a rapid decline during the years 2028 and 2029.
It is worth noting that the Egyptian economy receives additional support in addition to the International Monetary Fund program, represented by a financing package worth 7.4 billion euros provided by the European Union to cover the period extending between 2024 and 2027.
