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President of the Middle East Credit Rating "MERIS" Dr. Amr Hassanein said that the reduction of Moody's Investors Service for sovereign debt in foreign currency of Egypt to CAA1 from B3 means it has put Egypt at the stage of countries close to faltering. The new credit rating indicates that the political situation in Egypt is not stable, Hassanein added. Cutting down Egypt's credit rating may also affect the negotiation process on the International Monetary Fund (IMF) USD 4.8bn loan to be extended to Egypt, especially that the rating lessens Egypt's credit capabilities, he said.
The Moody's rating of Egypt also discloses the risks surrounding Egypt's ability to meet its commitments or obtain an IMF loan, Hassanein said, adding that this rating does not give a clear vision on the economic and financial policies in Egypt in the coming period. Hassanein noted that getting out of the current situation needs a "bitter" economic reform program that includes subsidy restructuring and pursuing strict economic policies.
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