Fitch lowers Egypt ratings outlook

Paris - Fitch ratings agency revised its outlook for Egypt to negative on Friday over increased uncertainty caused by a surge in protests demanding the ouster of President Hosni Mubarak.

"The Outlook revision reflects the recent upsurge in political protests and the uncertainty this adds to the political and economic outlook ahead of September's elections," Richard Fox, Head of Middle East and Africa Sovereign Ratings at Fitch, said in a statement

Riot police in Egypt fired tear gas and rubber bullets to disperse tens of thousands of protesters who flooded out of Friday prayers demanding an end to decades of corruption and oppression and the ouster of Mubarak.

But in a hint that authorities might heed public anger, a senior lawmaker and member of the ruling party called for "unprecedented reforms" in order to stave off a revolution.

Fitch said political risk has always been a consideration in Egypt's ratings and has been one of the factors constraining its rating from moving up to an investment-grade level.

"A continuation or intensification of significant unrest that seriously threatened economic and financial performance and the economic reform process would lead to a rating downgrade," Fitch said.

Egypt currently has a long-term foreign currency issuer default rating of 'BB+' from Fitch.

"By contrast, an effective government response that eased political tensions up to and beyond September's elections and allowed economic reforms to continue, would mean the rating outlook would return to stable," it added.

Fitch said it currently does not expect Egypt's macroeconomic outlook to change significantly as a result of this week's events.

The ratings agency also said while it "does not expect a repeat of the events in Tunisia, recent events in that country serve as a reminder that political changes can erupt unexpectedly and with uncertain consequences."

The January 14 ousting of Tunisian dictator Zine El Abidine Ben Ali, who had ruled for 23 years, by a popular uprising inspired opposition movements across the Arab world.