Good morning, folks. We are one day closer to the Eid break, but the news cycle isn’t showing any signs of slowing down.

We lead today’s issue with an exclusive that the government is looking into increasing its budget for public sector wages to beyond the EGP 700 bn mark, in a move we believe will be a major test for the government’s plan to reduce the budget deficit.

BUT FIRST- Attention, readers working in banks and in the private sector. You will also be off from Thursday, 19 March to Monday, 23 March to celebrate Eid El Fitr alongside the public sector, the Central Bank of Egypt and the Labor Ministry confirmed in separate statements (here and here). The EGX is yet to release a statement, but we expect it to follow suit in the coming days.

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ENERGY — The Madbouly government will not raise electricity prices until at least the end of June, a senior government official tells EnterpriseAM. Despite rising production costs following the recent fuel price hikes, the state has opted to maintain current power tariffs to avoid further stoking inflation and putting additional pressure on the cost of living, we were told.

While this move will keep the electricity subsidy bill elevated, the official expects it to land between EGP 70-80 bn in the upcoming fiscal year’s budget, compared to roughly EGP 75 bn in the current FY.

What’s next? To bolster domestic energy supplies and reduce the need for expensive energy imports, the Electricity Ministry is working with private sector partners to fast-track renewable energy projects, the source added. This includes bringing the Abydos 2 solar plant in Kom Ombo online and accelerating the integration of 2.5 GW of renewable capacity into the national grid to reduce the state’s fuel bill.

LOOKING AHEAD — Egypt ranks as the third most vulnerable emerging market to the economic spillovers of the US-Iran conflict, trailing Pakistan and India, according to a recent report from Fitch Solutions’ research unit BMI, seen by EnterpriseAM. The assessment highlights Egypt’s “fragile external position,” high exposure to energy price volatility, and unanchored inflation as the conflict drags into its third week.

Egypt is uniquely exposed to trade disruptions through the Strait of Hormuz. More than 10% of Egypt’s total goods imports pass through the chokepoint. “Those most reliant on imports through this chokepoint, including key goods such as food and energy, face greater delays to shipments and additional costs,” the report notes.

The double threat: BMI identifies Egypt as one of the energy importers most vulnerable to balance-of-payments strains and currency depreciation. The country’s total energy subsidies are estimated at 20% of GDP — a figure BMI notes is double that of mainland China, the next highest EM. With a fiscal deficit exceeding 7% of GDP, high energy prices — with Brent crude potentially hitting USD 110-130 / bbl — could balloon the state’s subsidy bill and widen the budget gap, BMI warns.

An early end to monetary easing? The inflationary shock of the conflict is already being felt, potentially derailing the central bank’s plans for a dovish pivot. “Inflation [in Egypt] currently exceeds target rates, so an inflation shock would probably cause an early end to [its] easing cycle,” the report adds.

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Happening today

It’s day two of Foreign Minister Badr Abdel Ati’s tour of the Gulf “to convey a message of solidarity” amid the war, according to a ministry statement. Abdel Ati is in Oman — his third stop of the trip — to “address ways to reduce escalation and tension and promote calm in the region,” according to a separate statement.

To kick off day one of the trip, the minister met Qatari Emir Tamim bin Hamad Al Thani in Doha to deliver a message of Egypt’s “complete and absolute support” for Qatar following recent Iranian strikes. Abdel Ati then landed in the UAE to meet his Emirati counterpart to relay Egypt’s support for the country amid “delicate and difficult circumstances and unprecedented challenges facing the UAE and the entire region.”

Open call

Germany’s Facility Investing for Employment will launch a newopen call for proposals in Egypt on 15 April, offering substantial co-financing grants to boost job creation in the private sector, according to a statement(pdf). Applications will be accepted until 30 June, after which selected applicants will be able to submit their full proposals.

Companies, public entities, and nonprofit organizations can apply for grants ranging between EUR 800k-10 mn per project, which can cover 25-90% of total project investment costs. This round also comes with a new feature that allows applicants to request additional co-financing for training measures specifically designed to qualify workers for employment in Germany.

Data point

20.9% — that’s how much auto sales slipped m-o-m in January, coming in at 14.0k, according to figures from the Automotive Marketing Information Council seen by EnterpriseAM. Despite the monthly fall, total sales were up 39.1% y-o-y as the sector continues its recovery from a two-year slump.

PSA

Set to fly Egyptair to Dubai soon? You will want to double-check your itinerary. Egypt’s flag carrier will operate just one daily flight to Dubai instead of its usual two, starting Sunday, 15 March, until further notice, according to a statement. The decision follows instructions from Dubai International Airport authorities to reduce arriving and departing flight traffic amid recent regional developments.

WEATHER- It’s another hazy day in Cairo today, with a high of 23°C and a low of 14°C, according to our favorite weather app.

The sun is set to be out in full force in Alexandria, with a high of 23°C and a low of 12°C.

The big story abroad

The regional war is still getting ink from all international dailies — no surprise there — as Washington raises the stakes. US President Donald Trump has warned Nato that it faces a “very bad” future if the coalition does not help the US in reopening the Strait of Hormuz, he told the Financial Times. Trump also signaled that he may delay his sit-down with China’s President Xi Jinping — scheduled for later this month — in efforts to pressure Beijing to act.

And in the world of e-commerce: Chinese e-commerce giant JD.com has launched its online marketplace — Joybuy — in European markets, as it prepares to face off with its major rival Amazon. China’s largest direct online retailer has stepped foot into the UK, Germany, France, the Netherlands, and Luxembourg, diversifying its offerings away from its home market, where retailers face fierce competition vis-a-vis fast delivery times.

AND- This year’s Oscars are wrapping up as we hit send this morning. Among those who secured awards during the ceremony: Jessie Buckley won best actress for her performance in Hamnet and Sinners’ Michael B Jordan was awarded best actor. One Battle After Another took home the award for best picture.

*** It’s Blackboard day: We have our weekly look at the business of education in Egypt, from pre-K through the highest reaches of higher ed.

In today’s issue: We look at how the country’s plan to attract Gulf students to Egyptian universities and set up universities in the GCC is undergoing a rethink amid regional uncertainty.

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