Economic reform in Egypt is bringing FDI flooding in, S&P reports

"Egypt has had remarkable success recently in raising the level of FDI, a crucial source of capital as well as a means to encourage competition and import know-how," said Standard & Poor's credit analyst Farouk Soussa.

The country's boom in FDI has occurred in the context of improved economic management and renewed confidence in investor prospects. All this has been beneficial to economic growth, which increased to 7.1% year on year at the end of 2006/2007, the highest rate in recent times.

Efforts to improve Egypt's business environment were this year recognised by the World Bank's Doing Business Report 2008; the country's rank improved to 126 out of 178, an improvement of 39 places, making it the No. 1 reformer.

Nonetheless, since our revision of the outlook to stable from negative in March 2005, we have not raised the ratings on Egypt. They continue to be constrained in the 'BB' category by the country's fiscal inflexibility, and by uncertainty surrounding presidential succession.

"There is still scope, though, for the sovereign credit rating to improve as rising fiscal revenues--driven in part by FDI--and debt stock falling as a proportion of GDP, provide increased fiscal flexibility," said Mr. Soussa.