In its latest assessment issued on 10 October 2025, Fitch said Egypt’s foreign exchange reserves have stabilized after a sharp recovery in the first half of 2024 and are projected to remain steady through 2027 at around 4.2 months of current external payments (CXP).
The agency noted that Egypt has maintained greater exchange-rate flexibility since March 2024, while the banking sector remains “resilient and highly liquid” despite regional tensions weighing on Suez Canal revenues.
Fitch highlighted a notable decline in inflation, which dropped to 12 percent in August from 26 percent a year earlier, supported by tighter monetary policy and easing global prices.
It projected that lower policy interest rates will reduce the debt interest-to-revenue ratio from a record 64 percent to about 40 percent by 2029, though this remains elevated.
The report cautioned that contingent liabilities and the slow pace of structural reforms continue to pose risks, even as macroeconomic stability improves.
Fitch outlined several downside risks to Egypt’s rating, including a potential deterioration in external finances, weaker commitment to exchange-rate flexibility, a widening current account deficit, or loss of access to international markets.
Rising debt sustainability pressures and a loosening of fiscal policy could also weigh on the outlook, while any escalation in regional conflicts could dampen tourism, investor sentiment, and Suez Canal receipts.
On the upside, Fitch said Egypt’s ratings could benefit from a stronger reserve position, a sustainable narrowing of the current account deficit, and accelerated structural reforms that strengthen external and fiscal resilience.
A marked decline in inflation toward the Central Bank of Egypt’s (CBE) target, alongside enhanced fiscal consolidation and lower debt issuance costs, would also support an upgrade.
Overall, Fitch described Egypt’s reform trajectory as gradual but constructive, emphasizing that policy credibility, sustained inflation control, and fiscal discipline will be key to maintaining stability and improving investor confidence over the medium term.
From a broader regional perspective, Fitch noted that Middle East and North Africa (MENA) economies are demonstrating strong resilience despite ongoing conflicts and lower oil prices, supported by structural reforms, prudent fiscal management, and steady investment activity.
The agency said that while geopolitical tensions have intensified in parts of the region, their economic impact has so far remained limited and geographically contained.
“There has been no impact on ratings from recent bouts of intensified conflict,” Fitch stated, noting that external support, ongoing reforms, and relative social stability have helped sustain the credit profiles of most neighbouring sovereigns.
Fitch emphasized that growth is strengthening across the MENA region, driven by both oil and non-oil sectors.
Oil-producing economies are benefiting from higher output following the rise in OPEC+ quotas, as well as from state-led investment programs that are fueling non-oil growth.
Meanwhile, Egypt and Morocco have recorded notable recoveries, Egypt’s expansion supported by a rebound in domestic demand, and Morocco’s by strong investment flows and improved weather conditions, boosting agricultural output.
Despite regional instability, oil prices have remained relatively stable, with ample spare capacity among OPEC+ members helping absorb supply shocks. Fitch forecasts Brent crude prices to average $70 per barrel in 2025, under which all Gulf Cooperation Council (GCC) sovereigns, except Bahrain and Saudi Arabia, are expected to post fiscal surpluses.
The agency noted that while Saudi Arabia’s public finances are weakening due to increased spending, the kingdom’s diversification reforms and strong balance sheets continue to underpin its sovereign rating.
Fitch also reported a modest improvement in the region’s overall credit profile over the past year, despite lower oil prices and persistent conflict risks.
“There were no downgrades over the last 12 months, marking the longest period without a downgrade since the first half of 2015,” the agency said. The net upgrade balance during that period stood at two, with Tunisia’s recent upgrade contributing to the positive trend.
For the first time since July 2019, no sovereign in the region is rated below ‘CCC+’, Fitch added, reflecting the region’s broad-based recovery and greater fiscal and monetary policy resilience.
However, the agency cautioned that renewed military escalation between Iran and Israel or a widening of current conflicts could pose significant downside risks to the region’s stability and investor sentiment.
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