Egypt named by Moody’s as one of the countries most at risk of rising global interest rates

Egypt is among the most vulnerable to rising global interest rates –Moody’s. Ratings agency Moody’s says Egypt joins Mongolia and Mozambique as holding the highest credit risk for exposure to rising interest rates in frontier markets “with these sovereigns demonstrating limited available fiscal and monetary space.” On the broader scale, frontier markets debt levels will remain elevated and they will continue to spend more on debt service in the next year. “The strength of institutions determines a sovereign's ability to counter negative shocks, such as a rise in global capital costs. In many FMs, weak institutions constrain their ability to buffer against shocks,” says Moody’s. The report also says that relying on foreign capital to fund current account deficits heightens the vulnerability of these sovereigns to capital outflows or lower inflows that can exacerbate difficulties in meeting current account and external debt payment obligations.