(MENAFN) Egypt recently lost its long term local currency rating BB by Fitch Ratings, with a negative outlook, as its currency reserves continue to shrink, Arab News reported.
Fitch downgraded Egypt's long term local currency rating to BB, while its foreign currency Issuer Default Rating (IDR) was downgraded to BB- from BB and the outlook on both ratings was negative. The country's credit rating was also downgraded to BB-.
Fitch pointed at the continuous erosion of Egypt's international reserves in 2011, which accelerated in October/November, providing that the political unrest contributed to worsened debt dynamics.
Egypt's foreign reserves declined 44 percent to over USD20 billion by November from USD36 billion in December 2010.
The decline was attributed to the dramatic weakening of the capital account since February, with a drying up of FDI and substantial exit of foreign portfolio investment, in addition to the absence of promised external support.
The country's ratings will remain under pressure until the political situation stabilizes and a government is able to execute a comprehensive scheme that re-attracts external support and FDI.