S&P Expects Israel-Gaza War to Affect Egypt’s Economy, Downgrades its Rating

Hotels, banks, and offices on the Nile River in Cairo. (Reuters)
Hotels, banks, and offices on the Nile River in Cairo. (Reuters)
TT

S&P Expects Israel-Gaza War to Affect Egypt’s Economy, Downgrades its Rating

Hotels, banks, and offices on the Nile River in Cairo. (Reuters)
Hotels, banks, and offices on the Nile River in Cairo. (Reuters)

Global rating agency S&P on Friday downgraded Egypt's long-term sovereign credit rating by one notch to "B-”, citing the country's mounting funding pressures.

The Agency expected the country’s economy to be affected by the ongoing war between Israel and Gaza since the seventh of October.

“Our current base case is that the conflict will likely be largely contained to Israel and Gaza. However, given its border with Gaza, and its control of the Rafah crossing, Egypt is directly affected.”

“The shutdown of Israel's Tamar gas platform has already reduced Egypt's gas imports to 650 million cubic feet per day (cf/d) from 800 million cf/d, reducing Egypt's ability to meet domestic demand and export liquefied natural gas.”

“Slow progress on key monetary and structural reforms has delayed the disbursement of multilateral and bilateral funds critical to covering Egypt's high external funding needs.”

"The stable outlook balances the risk that the Egyptian authorities may be unable to finance high external debt redemptions," S&P said.

Commenting on S&P's decision, Egypt's Minister of Finance Mohamed Maait stated that the government is pursuing more reforms and structural measures in the next period to cope with the economic challenges from both internal and external sources, especially those mentioned in the S&P’s report.

The report downgraded Egypt’s sovereign credit rating in both local and foreign currencies from B to B-, with a stable outlook in the long term, and kept the short-term credit rating at B.

Maait said in a statement issued by the Ministry of Finance on Saturday that despite the difficulties that the Egyptian economy still faces due to the global inflationary wave caused by geopolitical tensions, Standard & Poor’s changed the future outlook from negative to stable based on the significant structural reforms recently carried out by the Egyptian government, which helped achieve financial discipline.

He explained that the government managed to balance all the current variables and challenges on both the global and domestic levels, including the rise in inflation rates, interest rates, and the depreciation of the local currency against the dollar.

An initial surplus of 1.63% of the GDP was achieved compared to an initial surplus of 1.3% of the GDP in the fiscal year 2021/2022, and the total budget deficit reached 6% of the GDP compared to 6.1% during the fiscal year 2021/2022.

The finance minister pointed out that tax revenue grew strongly by 27.5% due to efforts in modernizing the tax system, improving tax administration, and combating tax evasion and avoidance.

Standard & Poor’s expected financial discipline to continue by implementing measures to modernize the tax system, in addition to the government’s efforts to rationalize spending during the fiscal year 2023/2024, ensuring an initial surplus of 2.5% of the GDP.

Maait confirmed that legislative amendments have been enacted to cancel tax and customs exemptions on economic and investment activities for state-owned entities and companies, leading to fair competition in the Egyptian market as part of the state’s efforts to empower the private sector.

Egypt has implemented around $2.5 billion exit deals during the first quarter of FY2023/2024, which increased foreign exchange inflows and provided the financing required to meet the country's needs, Maait stated.

He added that Standard & Poor’s clarified in its report that it might upgrade Egypt’s sovereign rating if more foreign currency inflows are attracted to the Egyptian economy, considering it as an additional resource that can be achieved by accelerating the offering program in the upcoming period, enhancing the Egyptian government’s ability to cover its financing and external needs over the next two years, and also contributing to reducing external financing needs and thereby reducing debt servicing costs.



Saudi's flynas Strikes Deal for Additional Airbus A320neos, 15 A330s

Saudi's flynas strikes deal for additional Airbus A320neos, 15 A330s (flynas)
Saudi's flynas strikes deal for additional Airbus A320neos, 15 A330s (flynas)
TT

Saudi's flynas Strikes Deal for Additional Airbus A320neos, 15 A330s

Saudi's flynas strikes deal for additional Airbus A320neos, 15 A330s (flynas)
Saudi's flynas strikes deal for additional Airbus A320neos, 15 A330s (flynas)

flynas, Saudi Arabia’s leading low-cost carrier, has signed a Memorandum of Understanding (MoU) with Airbus for 75 A320neo family aircraft and 15 A330-900. This strategic agreement will expand the airline's capacity, range and enhance its overall fleet capabilities.
Signed during Farnborough International Airshow in the presence of President of the General Authority of Civil Aviation (GACA) of Saudi Arabia, Abdulaziz bin Abdullah Al-Duailej, Chairman of the Board of NAS Holding Ayed Al Jeaid, flynas Chief Executive Officer & Managing Director Bandar Almohanna, and Airbus Chief Executive Officer, Commercial Aircraft, Christian Scherer, Airbus said on its website.
The new aircraft will join the carrier’s all Airbus fleet serving international, domestic and regional routes. The new A330-900 aircraft will boast a two-class configuration, accommodating up to 400 passengers.
"We are excited to further strengthen our long-standing partnership with Airbus," said Bander Almohanna, CEO and Managing Director of flynas. "The A320neo Family provides exceptional operational performance and environmental benefits, allowing us to offer unique, low-cost travel experiences. Additionally, the A330neowill enhance our long-haul capabilities with its advanced technology and efficiency while supporting our growth plans and Saudi Arabia’s pilgrim program."
Airbus Chief Executive Officer, Commercial Aircraft, Christian Scherer said, "We are delighted to expand our partnership with flynas through this significant milestone for both A320neo and A330-900 aircraft. The A330neo will allow flynas to further grow into widebody markets by building on the A320, benefiting from Airbus’ unique commonality. Both aircraft types offer flynas the perfect versatility and economics to expand into new markets while offering their passengers the latest cabin experience and comfort. We look forward to continuing our successful collaboration with flynas as they embark on this exciting new chapter."
The addition of the A330-900 aircraft will support flynas' ambitious growth plans. The airline anticipates significant operational efficiency gains by combining the new widebody aircraft with its existing A320neo fleet. The A330-900 offers increased capacity and range at unrivaled seat costs, ensuring flynas can compete effectively in the growing regional market, a key focus area for the airline.
The A330neo delivers unbeatable operating economics, powered by the latest-generation Rolls-Royce Trent 7000 engines, featuring new wings and a range of aerodynamic innovations resulting in a 25 percent reduction in fuel consumption and CO₂ emissions compared to previous generation competitor aircraft. The A330neo is capable of flying 8,150 nm / 15,094 km non-stop, providing ultimate comfort with more passenger space, a new lighting system, latest in-flight entertainment systems and full connectivity throughout the cabin.
As with all Airbus aircraft, the A330 family is already able to operate with up to 50% Sustainable Aviation Fuel (SAF). The manufacturer is targeting to have its aircraft up to 100% SAF capable by 2030.