On May 13, 2016, S&P Global Ratings revised its outlook on its long-term sovereign credit rating on Egypt to negative from stable. At the same time, we affirmed our 'B-/B' long- and short-term foreign and local currency sovereign credit ratings on Egypt.

OVERVIEW

Egypt's economic recovery will likely continue to suffer from foreign exchange shortages, and external and fiscal financing pressures.

We forecast that Egypt's current account deficits will widen to an average of 4.8% of GDP in 2016-2019. We expect weak exports, particularly tourism receipts, to continue to exert considerable pressure on Egypt's foreign currency reserves.

Fiscal consolidation is proceeding more slowly than we had anticipated, but we continue to expect lower energy prices and revenue raising measures to lead to somewhat lower deficits in the next few years.

We are revising the outlook to negative from stable. At the same time, we are affirming our 'B-/B' long- and short-term foreign and local currency sovereign credit ratings on Egypt.

The negative outlook reflects our view that Egypt's external and fiscal vulnerabilities might increase further over the next 12 months. This could dampen the country's economic recovery and exacerbate sociopolitical challenges.