Egypt's economy improves as politics stabilise says Moody's

Moody's Investors Service says that Egypt is demonstrating signs of political stabilisation and economic improvement, with credit challenges centred on weak government finances. The government has started the implementation of measures to lower fiscal deficits and contain government debt, while external financial support from Saudi Arabia, the United Arab Emirates, and Kuwait have helped stabilise the country's international reserves and government funding costs, says the ratings agency.

Moody's conclusions were contained in its just-released credit analysis, titled "Egypt, Government of" and which examines the sovereign in four categories: economic strength, which is assessed as "moderate (+)"; institutional strength "low (-)"; fiscal strength "very low (-)"; and susceptibility to event risk "high (+)". These represent the four main analytic factors in Moody's Sovereign Bond Rating Methodology. The analysis constitutes an annual update to investors and is not a rating action. Egypt is rated Caa1 with a stable outlook.

The analysis follows Moody's decision on 20 October 2014 to change the outlook on Egypt's government bond rating to stable from negative. At the same time, Moody's affirmed the rating at Caa1.