CAIRO: The recent deterioration of Egypt’s economic outlook could increase the risks to sovereign credit ratings, Moody’s Investors Service said Monday in a statement.
“The five-year EDF measure corresponds to an implied rating of B1, which is comfortably noninvestment grade. The Moody’s agency rating sits two notches lower, at B3,” the statement read.
The agency attributed this deterioration to Russian plane crashed in Central Sinai in on Oct. 31, saying “Tourist numbers have dried up and are not expected to recover in the near term…Russia accounting for around 30% of all tourist arrivals. Egypt’s economy, particularly its external account, will be affected by the decline.”
Concerning the recent floating of the exchange rate operated by the Central Bank of Egypt (CBE), Moody’s said the floating process came under pressure due to decline in the foreign exchange receipts.
Egypt’s foreign reserves fell to US$16.4 billion in September, Moody’s noted, which is sufficient to cover only three months worth of imports, adding that the current account deficit is expected to hit 3.7% of GDP in 2015.
Moody’s statement came two weeks after Standard & Poor’s Ratings Services downgraded its outlook on Egypt’s credit rating to “stable” from “positive” and affirmed its ‘B-/B’ long- and short-term foreign and local currency sovereign credit ratings.