25 Dec 2012

Egypt credit rating downgraded

4:02 pm on 25 December 2012

Standard Poor's downgraded Egypt's long-term credit rating on Monday because of "elevated" tensions over its political crisis and warned it could be lowered further.

The long-term rating was lowered to B- from B.

"A further downgrade is possible if a significant worsening of the domestic political situation results in a sharp deterioration of economic indicators such as foreign exchange reserves or the government deficit," the agency said.

Egypt's economy was brought low after President Hosni Mubarak was deposed in February last year after ruling for three decades.

AAP reports the uncertainty has not improved under President Mohamed Mursi.

Agreement on a loan of $US4.8 billion from the International Monetary Fund was put on hold this month because of a political impasse.

AAP reports the IMF funding is needed to prevent a collapse of Egypt's currency. Foreign reserves have more than halved since Mr Mubarak's overthrow to less than $US15 billion.

SP's short-term rating for Egypt was maintained at B but with a negative outlook.