In a statement on Saturday, Maait explained that the agency's downgrade of Egypt's credit rating was based on the economic challenges resulting from the negative impacts of the COVID-19 pandemic, the inflationary wave, and the Russian war.

Expressing optimism for the future, Ahmed Kajouk, deputy finance minister, said Moody's could upgrade Egypt's sovereign rating if the state enhances its capacity to attract more foreign currency inflows through the announced offerings and exits program.

In such a case, he clarified that these measures would help strengthen the country’s foreign exchange reserves, reduce external borrowing, reduce the debt service bill, and enhance the confidence of investors and institutions in the Egyptian economy.

Maait stressed that, despite Moody's decision, the Egyptian economy exhibited “robust” financial performance during FY2022/23.

The finance ministry handled all challenges — including rising inflation and interest rates and the depreciation of the Egyptian pound by more than 50 percent against the US dollar, Maait further noted.

In FY2022/23, Egypt’s achieved an initial surplus of 1.63 percent of GDP, up from a primary surplus of 1.3 percent in FY2021/22.

In addition, the total budget deficit reached 6 percent of GDP, down from 6.1 percent a year prior.

On Thursday, Moody’s downgraded Egypt’s credit rating from B3 to Caa1, changing the outlook from negative to stable, attributing its decision to the foreign currency crunch in the face of increasing external debt service payments over the next two years.

The rating agency also downgraded Egypt's foreign-currency senior unsecured ratings to Caa1 from B3 and its foreign-currency senior unsecured MTN program rating to (P) Caa1 from (P) B3.

Moody's expected that the sale of assets would go ahead in the Central Bank of Egypt to help restore the Egyptian economy’s hard currency liquidity reserve.

"The local-currency ceiling was lowered to B1 from Ba3 and the foreign-currency ceiling to B3 from B2," the agency said in its report on Egypt.

The report confirmed that the Egyptian economy improved in the current account deficit to 1.2 percent of GDP by the end of FY2022/23 from 3.5 percent in the year before, driven by strong Suez Canal and tourism revenues.

This downgrading is the second since the beginning of 2023, as Moody's previously downgraded Egypt’s credit rating in February from B2 to B3, changing the outlook from negative to stable.

However, in July, it maintained Egypt’s long-term foreign and local currency issuer ratings (credit rating) at B2 with a stable outlook.