CORRECTED - UPDATE 1-S&P cuts Egypt ratings; may cut again within 3 mths
(Corrects in para 2 to say that Fitch cut its outlook on Eygpt, not its rating)
LONDON Feb 1 (Reuters) - Standard & Poor's downgraded Egypt's debt on Tuesday by a notch and said it could cut the country's rating by a bigger margin within three months if the political crisis leads to significant instability.
It followed ratings agency Moody's, which cut its rating on Egypt on Monday, while Fitch last week cut its outlook on Egypt to negative.
S&P said the mass protests that appear to be close to loosening President Hosni Mubarak's hold on power would hamper Egypt's growth and damage its public finances.
S&P cut Egypt's long-term foreign and local currency ratings by one notch to BB and BB+ respectively, both with a negative outlook.
"We may lower the ratings again, potentially by more than one notch, within the next three months if we see further significant instability in the political environment," S&P said in a statement.
Moody's downgraded Egypt by one notch to Ba2 with a negative outlook on Monday, saying the government might damage its already weak finances by increasing social spending to calm the protests. [ID:nLDE70U0F4]
On Friday, Fitch Ratings cut its outlook on Egypt's BB+ country ceiling to negative, saying the political turmoil was likely to undermine the country's economic reform programme.
Egypt's budget deficit in the fiscal year to June 2010 was 8.1 percent of gross domestic product. It aims to keep the deficit at 7.9 percent this fiscal year and reduce it to between 3.0 and 3.5 percent in 2014/15, state news agency MENA quoted officials as saying last July. [ID:nLDE69S0UD]
The downgrades on Egypt come amid rising unease among rating agencies at the impact of political tensions across swathes of North Africa.
(Reporting by London Treasury Desk; editing by Susan Fenton)
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