"There would be further downgrade if the Egyptian government failed to stem the decline in reserves, or an uncertain policy environment and weak institutions emerge from the ongoing political transition," according to a statement issued by the credit rating agency.

　　S&P also affirmed that the short-term rating on Egypt was 'B' as well, and the outlook was negative.

　　"It is logical that the ratings on Egypt were downgraded because the foreign exchange reserves decreased due to security tensions and political instability... The foreign reserves have fallen to 16.1 billion U.S. dollars from 36 billion dollars one year ago," said former dean of Sadat Academy and economic professor Hamdy Adel-Azeem.

　　The downgrade of Egypt's credit ratings could negatively affect the process of loaning from abroad, leading to an increase of interest rates as confidence in Egypt's economy weakens, said Adel- Azeem.

　　The low ratings would also impact relations between Egyptian banks and international banks, Adel-Azeem noted.