The Central Bank of Egypt (CBE) and local authorities are actively implementing measures to contain the economic fallout from the coronavirus (COVID-19) pandemic, the International Monetary Fund (IMF) has reported.
The IMF has added a new “Policy Tracker” tool to its website, which summarises the key economic responses governments are taking to limit the overall impact of the coronavirus as of the end of March 2020.
The coronavirus is likely to impact the Egyptian economy primarily through declining travel and tourism activities, reduced remittances from expatriate workers and capital outflows. There is also likely to be a slowdown in domestic activities as people are asked to stay home, the IMF’s Policy Tracker said.
The weaker demand in the global market will also reduce Egypt’s exports, as well as Suez Canal earnings, the IMF added. However, it also said that the authorities have taken a set of precautionary measures to improve testing as well as to limit the community spread of the virus. These steps include setting up testing centres, temporarily closing places of worship, temporarily halting international air travel, and encouraging workers in non-essential sectors to work from home.
The CBE has reduced the policy rate by 300bps. It has also reduced the preferential interest rate on loans to small and medium enterprises (SMEs), industry, tourism and housing for low-income and middle-class families, from 10% to 8%.
The limit for electronic payments via mobile phones has been raised to EGP 30,000/day and EGP 100,000/month for individuals, and to EGP 40,000/day and EGP 200,000/per week for corporations.
In addition, a new debt relief initiative for individuals at risk of default has also been announced, marginal interest on debt under EGP 1m will be waived if customers make a 50% payment.
The regulations requiring banks to obtain detailed information of borrowers have been relaxed. The CBE has also launched an EGP 20bn stock-purchase programme, yet the International Monetary Fund (IMF) said the Egyptian authorities have not taken any measures regarding the exchange rate or balance of payments.
The government has announced stimulus policies in the $6.4bn package (EGP 100bn, 2% of GDP) to mitigate the economic impact the coronavirus, while pensions have been increased by 14%.
Energy costs have been lowered for the entire industrial sector; real estate tax relief has been provided for industrial and tourism sectors; and subsidy pay-out for exporters has been stepped up.
As part of the EGP 100bn stimulus, EGP 50bn has been announced for the tourism sector, which contributes close to 12% of Egypt’s GDP, 10% of employment, and almost 4% of GDP in terms of receipts, as of 2019.
The moratorium on the tax law on agricultural land has been extended for 2 years. The stamp duty on transactions and tax on dividends have been reduced. Capital gains tax has been postponed until further notice.