Macroeconomic analysts and experts believe that Egypt's credit rating will be upgraded soon and  attributed this to the improved performance of three key indicators. This includes monetary policy flexibility and the local currency exchange rate, rising rates of direct investment and economic growth, and a decline in risks associated with insuring the country's sovereign debt.

Exchange rate flexibility

The Egyptian economy has witnessed improvements in exchange rates and an abundance of foreign currency money supply, in addition to the removal of several limits on credit cards and daily withdrawals. Amr Hassanein, managing director of Middle East Rating and Investor Services (MERIS), said that the Egyptian economy has taken positive steps toward upgrading its credit rating, supported by improved indicators.

Hassanein added that the current flexibility of the exchange rate, along with the ongoing financial and structural reforms, gives the local investment climate significant confidence, which is one of the most prominent criteria used by global rating agencies in their evaluation of countries.

Haitham Fahmy, a financial markets expert, also noted a 22 percent increase in commodity exports, reaching USD24.5 billion during the first half of the year. Tourism revenues also rose by a similar percentage, reaching USD 8 billion.

Fahmy said: "The 66.2 percent increase in remittances from Egyptians abroad during the 2024/2025 fiscal year, reaching USD36.5 billion, strengthened the stability of the foreign exchange market."

Rising growth rates and direct investment

Medhat Nafea, an economic expert and member of the Cabinet's Macroeconomic Advisory Committee, said that raising Egypt's credit rating depends on several factors. The most important are the strength of public finances, the stability of the balance of payments, the promotion of sustainable growth rates, and the flexibility of monetary policy and the exchange rate.

Nafeh added: "Upgrading Egypt's credit rating is possible, but it is conditional on continuing reforms and attracting productive direct investments that ensure long-term stability."

The Egyptian economy recorded a growth rate of 4.8 percent in the third quarter of the current fiscal year, the highest quarterly growth rate in three years.

Decline in sovereign debt insurance risks

The head of the research sector at a commercial bank said that the decline in sovereign debt insurance costs to less than 3.8 percent in recent days is one of the most prominent indicators strengthening Egypt's position with international rating agencies.

He pointed out that the decline in the cost of external borrowing, as a result of the decline in US interest rates, gives Egyptian finances greater flexibility in structuring obligations, coinciding with the stability of the Egyptian pound against the dollar.

Mohamed Anis, an economic expert and member of the Egyptian Society for Economics and Legislation, emphasised the importance of the decline in sovereign debt swap risks, which reflects the state's improved ability to meet its obligations, supporting a credit rating upgrade.

Anis expected that agencies such as Moody's and Fitch would revise their outlook for the Egyptian economy from stable to positive, while praising recent reforms. The rating upgrade will be implemented in subsequent reports.

Existing challenges

Despite the positive indicators, Nafeh pointed out that some challenges remain that pressure the decision to upgrade the rating, most notably the high external debt, persistent inflation rates, and reliance on short-term financing.

Anis agreed. He stressed that the decline in the cost of debt risk, the decline in dollar interest rates, and the absence of price shocks in wheat or oil are positive factors. However, continued reliance on indirect cash flows remains a challenge to accelerating the rating upgrade decision.

Anis pointed out that the trade and payments deficit, along with the high debt-to-revenue ratio, are issues that require urgent economic solutions.

Last March, Moody's revised its outlook for Egypt from "negative" to "positive," affirming the sovereign debt rating in both foreign and local currencies at (Caa1).

In April, Standard & Poor's revised its outlook from "positive" to "stable" due to global financing pressures, while Fitch maintained its stable outlook for Egypt in its latest report.

Photo: Egypt will get an upgrade soon (by Adobe)