If the coronavirus (COVID-19) crisis had occurred in 2016, before the start of Egypt’s economic reform programme, the economy would have faced extreme stress, according to Minister of Planning Hala El-Said.
El-Said’s statement came during an AmCham webinar on Tuesday, entitled “A new Reality: Paving the Way Forward Post COVID-19”.
The minister highlighted that Egypt has had time to significantly strengthen its economic position against the global health crisis, due to the economic reform programme that was started in 2016.
El-Said added the government’s objectives in its economic measures to mitigate the virus’ impact are to support vulnerable groups. A total of EGP 100bn has been allocated under a comprehensive healthcare crisis plan to support economic activity, raise purchasing power and boost domestic demand.
The government has allocated an additional EGP 500 per month to irregular workers for a period of three months, with pensions getting five overdue bonuses at 80% of the basic salary.
The Central Bank of Egypt (CBE) has also announced that EGP 20bn has been put forward to launch a stock purchase programme, whilst the interest rate has been cut by 3%. A new debt relief initiative for individuals at risk of default has also been put into effect.
The government intends to increase health sector investments by 42%, education sector investments by 81%, transportation and roads investments by 90%, and investment in drinking water and sanitation by 78%. There will also be a significant 300% increase in digitalisation and telecommunications investments.
El-Said announced that total public infrastructure investments over the past seven years stands at EGP 1.5trn. The Egyptian government has, in the past five years, successfully implemented 4,253 infrastructure projects at a total cost of EGP 2trn.
El-Said emphasised that the number of intensive care beds at government hospitals has increased by 77%, with nurseries increasing by 8% and paediatric beds by 87%. A total of 25% of university hospitals have become automated.
The government allocated EGP 2.6bn of investments between July 2019 and March 2020, with EGP 10bn allocated as public investments in telecommunications and digitalisation as part of the FY 2020/2021 plan. This is in addition to EGP 8bn that will be mobilised for the Hayah Karema “Decent Life” initiative covering over 500 villages.
Regarding Egypt’s pre-crisis economic indicators, El-Said said the country achieved a 5.6% GDP growth rate in FY 2019/2020, with a 24% decrease in non-oil trade imports.
It is anticipated that Egypt will achieve 3.5% growth rate in FY 2020/2021, instead of the previous pre-coronavirus projection of 5.8%. Unemployment rates are also projected to increase by 2.3% to reach 10.3% in 2020, compared to the pre-coronavirus projection of 8%.
The Sovereign Fund of Egypt (TSFE) will initially focus on developing high potential investment products, local sectors, and encourage private sector participation. At the same time, it will ensure a level playing field in education, energy and infrastructure as well as FinTech and other technologies. This will occur alongside level playing fields in the food, agriculture, healthcare and pharmaceuticals, industry tourism and antiquities sectors.
TSFE CEO Ayman Soliman said the fund has changed its business strategy according to changes instigated by the coronavirus pandemic.
Soliman added that the TSFE’s long-term plan is to invest in natural strategic regional and international champions, and explore commercial investment opportunities abroad.