The secured rating means that Egypt can meet its financial obligations for now, but faces significant risks, especially from economic shocks or external pressures. Over the short term, the rating indicates that the country still has the capacity to repay its debts, but that ability is vulnerable to adverse conditions.
In its report on Egypt, the agency said Egypt remains vulnerable to shocks in global energy and food markets, with external pressures likely to fuel inflation and keep domestic interest rates elevated for a prolonged period. However, it noted that the country now holds stronger external buffers than in previous crises, supported by higher international reserves, a more flexible exchange rate, and continued access to multilateral financing.
S&P maintained Egypt’s transfer and convertibility assessment at ‘B’, stating that the stable outlook reflects a balance between medium-term growth prospects and ongoing reform momentum against rising geopolitical risks.
External pressures intensify
The report highlighted that Egypt’s external position is increasingly exposed to global shocks. The country has been a net energy importer since 2023, with fuel and gas accounting for about 22 percent and eight percent of total goods imports, respectively.
Disruptions to gas flows from Israel’s Leviathan field, which supplies around 60 percent of Egypt’s gas imports, have forced authorities to implement energy-saving measures. Meanwhile, Egypt, one of the world’s largest wheat importers, remains highly sensitive to fluctuations in global food prices.
S&P revised its current account deficit forecast to 4.8 percent of GDP in FY2025/2026, ending late June 2026, up from 4.1 percent projected in October 2025 and 4.2 percent in FY2024/2025.
The report also noted that foreign portfolio outflows reached about $10 billion within one month of the conflict, reflecting Egypt’s exposure to shifts in global risk appetite. Foreign holdings of local debt fell to $27.1 billion on 25 March, down from $38.1 billion in January.
Stronger buffers than past crises
Despite mounting pressures, Egypt has built significant resilience. International reserves rose to $52.8 billion in March 2026, compared to $41 billion at the onset of the Russia-Ukraine war in 2022.
The banking sector’s net foreign asset position reached a record $30 billion in January 2026, providing a cushion against capital outflows. S&P expects any further outflows to be absorbed by banks before impacting reserves.
The agency also emphasized Egypt’s commitment to a market-determined exchange rate, noting the pound has depreciated by about 13 percent against the US dollar since the outbreak of the war, with authorities refraining from intervention in line with the International Monetary Fund (IMF)-backed reforms.
Inflation and monetary policy
In this respect, the report noted that rising global energy and food prices are expected to sustain inflationary pressures on the country. Headline inflation accelerated to 15.2 percent year-on-year in March 2026, after hitting a 46-month low in January.
It added that the Central Bank of Egypt (CBE) kept its benchmark rates unchanged at 19 percent for deposits and 20 percent for lending in April, pausing a cumulative 825 basis-point easing cycle (8.25 percent) that began in April 2025.
S&P expects Egypt inflation rate to average around 15 percent in the current FY2025/2026 and the upcoming FY2026/2027, before easing to nine percent by FY2028/2029, although risks remain tied to the duration of the conflict.
Growth outlook and reforms
As per the report, economic growth is projected to moderate amid rising uncertainty. Real GDP expanded 5.3 percent in the first half (1H) of FY2025/2026, but S&P revised its full-year forecast slightly down to 4.7 percent, from 4.8 percent, and to 4.3 percent in FY2026/2027.
Growth has been driven by non-oil manufacturing (16 percent of GDP), the ICT sector (nine percent), and tourism (four percent), with Egypt receiving a record 19 million visitors in 2025.
The report said Egypt’s medium-term outlook depends on advancing structural reforms aimed at boosting private-sector participation, reducing the state’s economic footprint, and improving the business environment.
Fiscal pressures persist
S&P expects Egypt to record a budget deficit of 7.1 percent of GDP and a primary surplus of four percent in FY2025/2026. However, debt servicing remains a key challenge, with interest payments consuming 82 percent of total revenue in the first nine months of the current fiscal year (July 2025-March 2026).
Government debt is projected to decline to 89 percent of GDP by June 2026, from 94 percent in June 2023, and further to 83 percent by 2029, although gross financing needs remain above 40 percent of GDP.
External financing and support
Egypt continues to benefit from substantial external support. The IMF expanded its programme to $8 billion in March 2024, with disbursements of $2 billion under the latest reviews, alongside $273 million in additional facilities.
The country also secured more than $10 billion in multilateral financing, including a 7.4 billion euro ($8.1 billion) package from the European Union.
Gulf partners remain a key source of funding. Notable investments include a $35 billion UAE-backed Ras El-Hekma project, a $30 billion tourism deal with Qatar, and $18 billion in Gulf Cooperation Council (GCC) deposits at the CBE.
Risks and outlook
S&P warned that a prolonged conflict could weaken remittances, around 70 percent of which originate from GCC countries, and weigh on tourism and Suez Canal revenues.
Still, recent data show Suez Canal receipts rose 21 percent year-on-year to $3 billion in the first eight months of FY2025/2026, compared to $2.5 billion a year earlier.
The report said it could downgrade Egypt if reform momentum weakens, foreign currency shortages re-emerge, or borrowing costs rise further. Conversely, an upgrade could follow faster debt reduction, stronger foreign direct investment (FDI) inflows, and progress in economic diversification and privatization.
Overall, S&P concluded that while Egypt’s reform programme and external support provide a degree of resilience, the country remains highly exposed to regional geopolitical shocks and global market volatility.
Moody’s affirms Egypt's rating as well
Last week, the American credit rating agency Moody's affirmed Egypt's sovereign credit rating at Caa1 while maintaining a positive outlook.
This action indicates that Moody’s sees Egypt’s credit profile as still carrying very high credit risk, but with improving prospects. The agency kept the positive outlook, first assigned in March 2024, reflecting expectations that Egypt’s debt burden and external position could gradually improve if ongoing reforms and financing conditions continue to progress.
In practical terms, the action signals that Moody’s is waiting for clearer, sustained improvements before considering any upgrade, while acknowledging that conditions have been stabilizing enough to avoid a downgrade.
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