On Tuesday, Fitch Ratings said it had revised its outlook for Egypt from stable to negative while keeping its credit rating at B+. The finance and insurance company attributed its pessimistic outlook to a deteriorating external liquidity position and risks associated with Egypt’s increasing inability to meet financing needs, especially access to debt markets. This pessimistic view means an increase in the cost of new debts, a moment when the country’s accumulated debt burden has already reached a critical level.

Egypt is in a severe economic crisis that creates doubts about its ability to abide by its burdens, which are supposed to reach $15 billion by the end of 2023. Credit rating agencies evaluate parties wishing to borrow, whether governments or private institutions, to determine their future ability to repay debts. A financial analyst explained that Fitch’s pessimistic view means increasing creditors’ guarantees from Egypt to balance risks.

Fitch explained that Egypt faced a crisis during the past months due to a significant exit of debt traders, citing data from the Central Bank of Egypt, which mentioned the departure of 15 billion dollars from Egypt in March, 40% of the total foreign exchange reserves. Foreign exchange reserves were below the expected level, which Fitch estimated to cover four months of foreign payments. In October, foreign exchange reserves reached $33.4 billion, recording slight increases following the Egyptian pound exchange rate liberalisation.