S&P Global affirms Egypt’s rating at B/B, stable outlook

S&P Global affirmed Egypt’s sovereign credit rating at ‘B/B’ with a stable outlook, striking a “balance between Egypt’s medium-term growth prospects and strong reform momentum against renewed risks from a protracted conflict” in the Gulf, according to its latest report. The move follows a similar decision by Moody’s Ratings earlier this month, which maintained Egypt’s Caa1 debt rating and positive outlook, signaling that the structural reforms kicked off with the float of the EGP in 2024 are providing a buffer against extreme regional pressure.

Behind the rating: The agency attributed its rating to Egypt’s higher international reserves, which climbed to USD 52.8 bn as of March 2026 and a record net foreign asset position of USD 30 bn in the banking sector. Although the EGP lost about 13% of its value against the greenback since the onset of the war, the government has kept its thumb off the scale, maintaining its commitment to a flexible FX regime.

The stable outlook is underpinned by our continued commitment to an IMF-backed reform program, but S&P warns that progress is being offset by mounting external pressures. The agency flagged several triggers for a potential downgrade, including “any backtracking on key reforms — particularly exchange rate flexibility”— or a renewed widening of macro imbalances. Higher borrowing costs and limited access to international markets also remain significant risks to public finances.

S&P thinks we’re going to remain highly vulnerable to regional geopolitical shocks that could threaten inflows of foreign currency and make imports more expensive. It sees the nation’s current account deficit widening 4.8% of GDP in FY 2025-26, compared with 4.1% in its last forecast back in October. The comparable figure for FY 2024-25 was 4.2%.

Egypt’s key sources of hard currency are under pressure, including remittances from Egyptians living abroad, tourism receipts, and Suez Canal revenues. Still, it notes that Suez Canal revenues have remained relatively resilient, rising 21% y-o-y to around USD 3.0 bn in the first eight months of FY 2025-26, compared to USD 2.5 bn a year earlier, with no material impact from the war — so far.

As a net energy importer since 2023, Egypt also remains highly vulnerable to Israeli gas import disruptions — which account for 60% of the country’s total gas imports and 15-20% of its overall gas consumption. Furthermore, Egypt remains highly exposed to global food and wheat price instability, prompting the agency to widen its current account deficit forecast to 4.8% of GDP, up from 4.1% in October.

Foreign portfolio outflows are expected to remain elevated during periods of heightened global risk aversion. The agency noted that around USD 10 bn exited Egypt within one month of the conflict’s onset, mirroring patterns seen during the Russia-Ukraine war, when about USD 20 bn left local markets.

Despite a gradual improvement in Egypt’s debt metrics, S&P expects gross financing needs to remain elevated at above 40% of GDP. General government debt is expected to decline to 89% of GDP by June 2026 — down from a peak of 94% in 2023 — supported by stronger growth, exchange rate stability, and easing domestic yields. The ratio is forecast to fall further to 83% by June 2029.

Despite the conflict, S&P expects GCC states to continue providing significant financial support, citing Egypt’s strategic regional role. This support is underpinned by large-scale investments, including a USD 35 bn development project in Ras El Hekma and a USD 30 bn tourism project in Alam El Roum. Complementing these are around USD 18 bn in GCC deposits held at the Central Bank of Egypt, which are expected to remain in place until the IMF program concludes in December 2026.