Country risk in Egypt is high. The OECD has a country risk grade of 5, akin to a speculative grade sovereign credit rating. This indicates an elevated risk of Egypt being unable and/or unwilling to meet its external debt obligations. Liberalisation of the exchange rate, ongoing push to implement market reforms, strong GDP growth and IMF support are key credit strengths.
Egypt is ranked 114th out of 190 countries on the World Bank’s ease of doing business scorecard. Businesses find it difficult to enforce contracts, trade across borders, pay taxes and register property when compared to the rest of the Middle East. But getting credit, protecting minority investors, dealing with construction permits and getting electricity is somewhat easier.
The risk of expropriation in Egypt is moderate to high. This stems from large delays in the legal system to resolve cases, making it difficult for private enterprise to seek recourse from the government. Notably, the 2017 investment law provides guarantees against full or partial expropriation. But corruption is perceived as high and widespread.
Egypt underperforms most of the Middle East and North Africa region on the various measures of governance. Voice and accountability, regulatory quality and political stability are particularly weak in Egypt.
Political risk is elevated. But policy efforts to reform the economy and robust growth prospects could sow the seeds for strengthening governance. Indeed, Egypt’s governance scores improved in all categories except control of corruption in 2019. Political risk has improved significantly following the political crisis that plagued the first half of the 2010s.