Good morning, folks. We’re wrapping up a very busy week with another very busy issue. Leading the issue today is the prospect of amendments to the budget in light of continuing regional escalations, a big-ticket Chinese solar manufacturing project, updates to the Old Rent Law, and more.

PSA-

WEATHER- The sun is out in force in Cairo today, with a high of 34°C, a low of 23°C, and clear blue skies, according to our favorite weather app.

There’s also not a cloud to be seen in Alexandria, with a high of 30°C and a low of 23°C.

And over the weekend, expect to see temperatures inch up a degree in the capital and in Alexandria.

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WATCH THIS SPACE-

#1- The government could roll out tougher austerity measures if the regional war takes a turn for the worse, Prime Minister Moustafa Madbouly said during his weekly presser yesterday (watch, runtime: 58:06). “We are able to handle the current conditions, but if new developments arise, additional steps will be announced,” Madbouly said.

The Supreme Committee for Market Regulation will convene today to monitor price stability and reassure the market, Prime Minister said, stressing the government’s commitment to maintaining price stability and warning against “creating a crisis out of nothing.”

All domestic needs of natural gas will be secured by the end of this month, Madbouly said, adding that local production is expected to see a gradual uptick starting in August.

^^ We have more in this morning’s Budget Watch, below.

#2- Israel may restart natural gas supplies to Egypt as early as today, following a now six-day halt to flows, Israeli Energy Minister Eli Cohen said yesterday, Bloomberg reported. Flows will return to Egypt and Jordan only when the country’s military forces say it's safe, Cohen said in separate comments reported by Reuters.

But even if Israel turns back on the tap, flows will remain limited at first as Israel will continue to prioritize domestic needs first, the minister said. Gas supplies could also be halted again if Israeli demand pushes it to use coal and mazut for power generation, he added.

REMEMBER- Over the weekend, Tel Aviv shuttered the Leviathan and the Karish fields in the wake of military strikes on Iranian targets, taking 800 mcf/d away from the national gas grid. Reduced gas flows from Israel not only mean an increased reliance on significantly more expensive LNG or Mazut imports, but also put a significant strain on the country’s efforts to keep the lights on ahead of high-demand summer months.

#3- The United Nations High Commissioner for Refugees (UNHCR) is staring into USD 98 mn budgetary black hole in Egypt amidst a rising refugee crisis, according to its May 2025 report (pdf). The UNHCR has so far secured just 29% of its USD 137.7 mn annual financial requirements to support the 982k refugees registered with the UNHCR in Egypt — over 30k were registered in May alone.

The breakdown: Of the 982k refugees in Egypt, 73% come from Sudan, 14% from Syria, 5% from South Sudan, and 4% from Eritrea.

#4- The central bank has told banks to audit exporters ahead of the upcoming Carbon Border Adjustment Mechanism — known commonly by its acronym CBAM — according to a statement (pdf) from the bank. To prepare for the carbon tariff on imports into the EU set to launch at the start of 2026 and the UK’s own CBAM a year after, banks are instructed to examine their credit portfolio for companies that will be affected. Data should be collected on the identified companies for the sake of improving risk management ahead of the shake up to carbon-heavy exporting industries.

The CBE is also requiring banks to submit biannual data reports on these companies starting from 2H 2026. The reports — due every March and September — must be submitted to the CBE’s sustainability department. The CBE said lenders must also collect detailed data on these companies’ export activities to better manage risks to international carbon pricing regulations.

EGP WATCH-

The EGP weakened by around EGP 0.40 by the end of trading yesterday, with the USD ending the day being sold for around EGP 50.48-50 and selling for EGP 50.60-50.61 across state and private banks.

An uptick in foreign outflows from local debt was driven by fears of regional escalation, as Trump teased the US’ possible intervention in the war, a source in the banking sector told EnterpriseAM. Interbank USD transactions jumped to around USD 500 mn yesterday, our source added.

However, an uptick in yields this week has pushed some foreign investors to buy up USD 300 mn of local debt, in what is an indication of the attractiveness of the Egyptian market as one of the key destinations for debt instrument investors, we were told.

THE BIG STORY ABROAD-

On day six of the war between Israel and Iran, concern is rising that the US is preparing to join the war. Adding to the speculation, US President Donald Trump said that he had not made a final decision on whether he will strike the country, telling reporters, “I may do it, I may not.” Iranian Supreme Leader Ayatollah Ali Khamenei made his first appearance since Friday to respond to an increasingly hawkish Trump, warning the US president that their involvement in the conflict would “undoubtedly be accompanied by irreparable damage.” (Financial Times | Associated Press | New York Times)

While over in the business press, all eyes were on the US Federal Reserve, which decided to hold interest rates steady for the fourth meeting running despite increasing pressure from the Trump administration to change course. Chair Jerome Powell doubled down on the reserve’s position that they will wait to assess the full impact of the tariffs on US imports before “considering any adjustments to our policy stance.” Despite the decision to hold, the Fed still sees two interest rates to come before the end of year. We have more on the Fed’s decision in this morning’s Planet Finance section, below. (Bloomberg | Financial Times | Wall Street Journal)

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