Standard and Poor's ratings agency said Thursday it has cut its long-term rating on Egypt by one notch to 'B+' as popular unrest undercuts the country's already weak political and economic outlook. "The downgrade reflects our opinion that Egypt's weak political and economic profile... has deteriorated further (following)... the clashes between protesters and security personnel that began on November 20 and resulted in significant loss of life," S&P said.
Last month, S&P downgraded Egypt to 'BB-,' citing increased risks to the economy during the country's political transition and warning it could lower it again if there was fresh turmoil. Since Saturday, at least 38 protesters have been killed and more than 2,000 injured in clashes with police in Cairo's Tahrir Square, the epicentre of the popular uprising which forced Egyptian strongman Hosni Mubarak to step down as president earlier this year.
S&P said the violence has put increased pressure on Egypt's international reserves - which have fallen to $22 billion at end-October from $36 billion at the start of the year - weakening the country's economic profile. It said it was difficult to predict policy responses in Egypt due to "a highly polarised political landscape and highly centralised decision making."