(AFP Photo)
Moody’s, the international rating agency, affirmed Egypt’s Caa1 rating on Wednesday, classifying it as very high credit risk.
“The maintenance of the negative outlook on Egypt’s Caa1 rating is driven by Moody’s view of the country’s considerable economic and political challenges,” said a statement issued by the agency, which noted “the deepening political divide since the military deposed the government of President Mohamed Morsi on 4 July.”
The agency stated that Egypt’s rating could be downgraded further if there were an intensification of political unrest or instability in the banking system.
It added that a sharp rise in the government’s operating costs as well as any “significant deterioration in the external payments position” would also be a downgrading factor.
The firm stated that an upgrade to the rating is unlikely in the near term, but noted that the implementation of an International Monetary Fund-supported program of fiscal and economic reform would be considered as credit positive.
In March, Moody’s cut Egypt’s credit rating from B3 to Caa1, the sixth downgrade since January 2011.
