Moody’s assesses Egypt’s (Caa1 stable) credit strength as being supported by a large diversified economy, dedicated domestic funding base and a track record of primary surpluses, which support debt sustainability. However, high government debt, low debt affordability and very large refinancing needs pose risks. Persistent foreign-currency shortages and modest reserves pose a hurdle in the face of increasing external debt service payments (see Exhibit 1). Egypt is also exposed to social pressures stemming from high inflation and youth unemployment.