But Fitch Ratings has held its negative outlook for Egypt, warning that political uncertainty will likely linger until 2013. It downgraded the country's sovereign credit rating to 'B+' in June. 

 

In a statement this week, Fitch said that President Morsi's decision could signal a move towards a better and more sustainable relationship between the country's military and civilian powers

 

The firm went on to note that it was likely the forced retirement of Field Marshal Mohamed Hussein Tantawi, defence minister, and General Sami Annan, chief of staff, was agreed with members of the Supreme Council of the Armed Forces (SCAF). 

 

Tantawi's replacement as defence minister also sat on the council, which governed Egypt from February 2011 until this July. 

 

"The moves by President Morsi to strengthen his position need not therefore signal a worsening of relations with the military," said the statement.

 

"It seems that the president and military want to forge a working relationship. If the departures of Tantawi and Annan support this process, it would be positive although, without a parliament or constitution, Egypt is likely to remain in political limbo for some time yet. "

 

But Fitch added it remained unclear how and when Egypt will attain a new constitution, saying it believed the process would be likely to take at least three months. 

 

"Our concerns are unlikely to be resolved this year, keeping downward pressure on the rating," its statement concluded.