Moody's changes Egypt's outlook to negative from stable

By Ovunc Kutlu

ANKARA (AA) - The global rating agency Moody's kept Egypt's rating at B2 but changed the outlook to negative from stable.

"The negative outlook reflects the rising downside risks to the sovereign's external shock absorption capacity in light of a significant narrowing in the foreign exchange reserve buffer to meet upcoming external debt service payments," it said in a statement on Thursday.

The B2 rating, on the other hand, remains supported by the country’s economic and fiscal reform implementations over the past six years, the agency added.

Moody's noted that Egypt’s Central Bank has raised its monetary policy rate by a cumulative 300 basis points over the past two months in response to rising inflation, which rose 13.1% in April annually.

"Combined with the negative impact of inflation on living standards, food accounts for more than 30% of the consumption basket, [and] this points to potentially increasing social risks in Moody's assessment," the statement said.