"Egypt downgraded deeper into junk by S&P on currency squeeze"

" Egypt downgraded deeper into junk by S&P on currency squeeze \r\n\r\nEgypt was downgraded further into junk territory by S&P Global Ratings, as the North African nation struggles with a severe shortage of hard currency.\r\n\r\nS&P cut the country\u2019s debt to B- from B, with a stable outlook, the ratings company said in a statement. The decision puts the country on par with nations like Bolivia, Angola and Iraq.\r\n\r\n\u201cThe downgrade reflects the recurring delays to the implementation of monetary and structural reforms,\u201d S&P said.\r\n\r\nIt said those delays are \u201cexacerbating imbalances in the currency market, deteriorating the net foreign asset position of systemic banks, and delaying critical IMF disbursements and other multi- and bi-lateral financing.\u201d\r\n\r\nS&P lowered Egypt\u2019s outlook to negative in April, saying risks had increased that its allies in the wealthy Gulf Arab states would delay or refuse to provide funds.\r\n\r\nIt reiterated that concern in Friday\u2019s statement, saying the Gulf states are putting a greater emphasis on \u201cconditionality and achieving economic returns\u201d in their financing decisions.\r\n\r\nThe economic fallout of Russia\u2019s invasion of Ukraine last year hammered Egypt\u2019s finances, causing a rapid outflow of billions of dollars in foreign funds and leading inflation to soar.\r\n\r\nMoody\u2019s Investors Service this month lowered Egypt\u2019s credit score for the second time this year, bringing it to one of the lowest rungs amid what it called \u201cincreasingly constrained\u201d policy options to rebalance the economy without triggering social unrest.\r\n\r\nEgypt is struggling to pass the International Monetary Fund\u2019s delayed reviews of a $3 billion rescue program and bond investors are worried about a default. The Washington-based lender first wants to see authorities allow true flexibility in the currency.\r\n\r\nThe North African nation is in talks with the IMF on boosting its loan to over $5 billion, people familiar with the discussions told Bloomberg last week. Only a small portion of the $3 billion has been distributed so far.\r\n\r\nThe fund\u2019s managing director, Kristalina Georgieva, said Egypt will \u201cbleed\u201d precious reserves unless it devalues the pound again.\r\n\r\nBut a currency move is politically difficult ahead of December elections, which President Abdel-Fattah El-Sisi is likely to win. In June, the president appeared to reject another devaluation, warning of the toll that faster inflation would take on Egypt\u2019s 105 million people."

"Egypt downgraded deeper into junk by S&P on currency squeeze"

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