Egypt Outlook Raised to Stable by Fitch on Gulf Aid

Clashes in Cairo
Supporters of Egypt's deposed president Mohamed Mursi run for cover from tear gas fired by riot police during clashes in the northeastern part of Cairo's Nasr City district on Jan. 3, 2014. Nationwide clashes between police and supporters of Mursi left at least six people dead and 42 injured today, state-run Ahram Gate said, citing the Health Ministry. Photographer: Virginie Nguyen Hoang/AFP via Getty Images

Egypt’s credit classification was raised to stable from negative by Fitch Ratings, which cited financial aid from the Persian Gulf and the country’s efforts to restore democratic rule.

Fitch affirmed Egypt’s long-term foreign-currency grade at B-, or six levels below investment grade, in line with the rating by Standard & Poor’s and Moody’s Investors Service. The yields on the nation’s benchmark 5.75 percent Eurobonds due in April 2020 were little changed at 6.7 percent as of 4:51 p.m. in London.

Gulf nations have pledged about $15 billion in financial aid for the country after political turmoil that toppled two presidents and five prime ministers in the space of three years hammered Egypt’s economy. Egypt’s military-backed interim government has been cracking down on the Muslim Brotherhood after the ouster of Islamist President Mohamed Mursi in July, calling the movement a terrorist group last month.

“Significant financial assistance from Kuwait, Saudi Arabia and the United Arab Emirates has eased the pressure on reserves, the exchange rate and the budget, and boosted business confidence,” Fitch said in a report today. “The political scene has been calmed through a tough crackdown on the Muslim Brotherhood and restrictions on protests.”

Growth in gross domestic product will accelerate to 3.2 percent in the fiscal year ending in June and to 3.8 percent next year, from 2.1 percent in 2013, according to the statement.

Nationwide clashes between police and supporters of Mursi left at least six people dead and 42 injured today, state-run Ahram Gate said, citing the Health Ministry. A referendum scheduled later this month is intended pave the way for elections and the restoration of democratic rule.