Fitch Ratings believes Egypt cannot begin its long-term recovery until there is more certainty about its political future. Fitch has previously said it expected the sharp fall in foreign currency reserves largely as a result of substantial capital outflows to start being reversed by external support in Q4.

The delays to the political transition are now causing concern, with reserves continuing to fall, and the global backdrop less supportive.

Certainty over the political landscape in Egypt is needed to re-start foreign direct investment flows. Tourism revenues, which accounted for approximately USD12bn of foreign currency earnings, have also been hit by both the uncertainty in Egypt and although recovering, they are now threatened by the downturn in the euro zone.

Fitch had expected significant external support to have begun flowing by now. The risk of delays is reflected in the agency's Negative Outlook.

However, the longer delays continue, the more pressure it puts on the country's credit profile. Greater clarity on the timeline for external support would help bolster confidence in the current global climate.

The sharp fall throughout the year in international reserves is largely a result of substantial capital outflows prompted by political unrest.

Previously, Egypt's current account deficit was well covered by foreign-direct investment. More recently, the worsening of the global outlook has likely prompted renewed foreign sales of t-bills while "second-tier" reserves held in US dollars with local banks to meet such sales have already been used.