Standard & Poor’s kept Tuesday its credit rating for troubled Egypt unchanged after Gulf states pledged billions to support the post-coup government in Cairo.
Ten weeks after cutting Cairo’s sovereign rating to junk-level CCC+, S&P said it would hold the rating there, with a “stable” outlook, despite the July 3 military coup that overthrew the elected government of president Mohamed Morsi.
Although talks on a bailout loan with the International Monetary Fund have been frozen, S&P said the promises of $12 billion in aid from Saudi Arabia, Kuwait and the United Arab Emirates has “partially mitigated” the added risks from the fresh turmoil.
The loans, along with $3.7 billion in prior support from Qatar, “reduce the likelihood that Egypt will face a balance-of-payments crisis,” S&P said.
Even so, S&P said, the country’s ability to pay foreign creditors and stabilize its finances remains vulnerable, especially because Egypt is heavily dependent on imported food and oil, and maintains costly domestic subsidies for key commodities.
Cairo’s ability to keep raising money from abroad remains “vulnerable and dependent on favorable developments regarding donor support,” S&P said.
“We could lower the ratings if we conclude that the Egyptian authorities are unable to prevent a further significant deterioration in external, fiscal, or monetary indicators,” it said.