Moody’s raises Egypt’s outlook to stable on political stability

Moody’s raised Egypt’s credit ratings outlook to stable from negative on Monday, citing a more stable political and security situation and signs of economic recovery.

It refrained from upgrading the credit rating, keeping it at Caa1, still one notch below Standard & Poor’s, saying government finances are still too weak.

Moody’s said government initiatives and reforms launched over the past year, including plans to phase out fuel and electricity subsidies, and measures to lift public revenues by a shifting to value-added tax system from a goods and services tax, had improved the outlook.

The upgrade to the credit outlook may help restore confidence in an economy hammered by political turmoil that has weighed on investment and tourism for nearly four years.

A constitutional referendum in January and presidential elections in May this year, with parliamentary elections likely to be held by early 2015, had provided a political reform roadmap and led to greater institutional stability, Moody’s said in a statement.