Published: July 8, 2013
Ratings agency acts on political turmoil and likely economic repercussions.
Fitch Ratings has downgraded Egypt’s long-term foreign and local currency issuer default ratings from B to B-. Its outlook remains negative.
Already facing economic deterioration as a result of political gridlock, there is now “high uncertainty over how the risks resulting from the military coup evolve over the short term”, Fitch said in a statement. This uncertainty will make it even more difficult for Egypt to fulfill the criteria necessary to clinch a badly needed IMF agreement.
Other medium-term concerns cited include a big budget deficit – 13.5% of GDP for FY2013 – slow economic growth and depleting foreign currency reserves, which is holding back the growth of the private sector.