The agency also kept its transfer and convertibility assessment at ‘B’.
S&P Global Ratings has affirmed Egypt’s long- and short-term foreign and local currency sovereign credit ratings at ‘B/B’, maintaining a stable outlook, according to a statement released on April 10, 2026. The agency also kept its transfer and convertibility assessment at ‘B’.
The stable outlook reflects what S&P described as a balance between Egypt’s medium-term growth prospects and strong reform momentum, against renewed risks stemming from a protracted regional conflict.
Reform progress supports buffers
S&P noted that Egypt has entered the current geopolitical tensions with stronger external buffers compared to previous crises, supported by reforms implemented over the past two years. These include the liberalization of the foreign exchange regime, which helped unlock support from the International Monetary Fund and other development partners, while attracting significant foreign direct investment (FDI), particularly from Gulf Cooperation Council countries.
The reforms contributed to a buildup in international reserves to $52.8 billion as of March 2026, alongside improved inflows from tourism, remittances, and portfolio investments prior to the escalation of regional tensions in late February.
External pressures persist
However, S&P warned that the ongoing conflict is likely to weigh on Egypt’s external position, given its structural reliance on energy imports and exposure to global food price volatility. The agency revised its current account deficit forecast to 4.8% of GDP for FY2025/2026, up from earlier projections.
The report also highlighted increased sensitivity to capital flows, noting that foreign portfolio outflows reached around $10 billion within a month of the conflict’s onset. Still, strong foreign currency liquidity within the banking sector, reflected in a net foreign asset position of about $30 billion, provides a buffer against external shocks.
Exchange rate flexibility remains key
S&P emphasized that Egypt’s commitment to a market-determined exchange rate under its IMF-supported program remains a critical anchor. Since March 2024, the Egyptian pound has been largely driven by supply and demand dynamics, with the currency depreciating by around 13% since late February 2026.
The agency noted that authorities have refrained from direct intervention, reinforcing confidence in the policy framework.
Fiscal and inflation challenges
Despite ongoing fiscal consolidation efforts, Egypt continues to face elevated debt-servicing costs, with interest payments projected to absorb a significant share of government revenues. Inflationary pressures have also resurfaced, driven by higher energy and food prices, prompting the Central Bank to pause its rate-cutting cycle.
Rating outlook scenarios
S&P indicated that it could downgrade Egypt’s rating if reform momentum weakens, particularly regarding exchange rate flexibility, or if external imbalances and financing pressures intensify. Rising borrowing costs or reduced access to international markets due to geopolitical tensions could also weigh on the rating.
Conversely, an upgrade could be considered if Egypt achieves faster-than-expected improvements in its fiscal and external positions, supported by stronger FDI inflows, accelerated privatization, and successful economic diversification.
Growth outlook
While economic activity has shown resilience, with GDP expanding 5.3% in the first half of FY2025/2026, S&P expects growth to moderate to 4.7% for the full fiscal year, citing the impact of regional disruptions on trade, tourism, and investment sentiment.
Overall, the agency said Egypt’s medium-term outlook will depend on sustaining reforms, enhancing private-sector participation, and managing external vulnerabilities amid an uncertain geopolitical environment.
