{ "title": "Egypt: Overcoming the COVID Shock and Maintaining Growth", "publication": "IMF News, July 14, 2021", "sourceUrl": "https://www.imf.org/en/news/articles/2021/07/14/na070621-egypt-overcoming-the-covid-shock-and-maintaining-growth", "canonical": "https://www.imf.org/en/news/articles/2021/07/14/na070621-egypt-overcoming-the-covid-shock-and-maintaining-growth", "overlayPath": "/en/news/articles/2021/07/14/na070621-egypt-overcoming-the-covid-shock-and-maintaining-growth/index.md", "summary": "Egypt was one of the few emerging market countries that experienced a positive growth rate in 2020.
", "publishDate": "2021-07-14", "sections": [ { "heading": "Impact of the COVID-19 pandemic", "content": "- Tourism at the onset of the crisis accounted for around 12 percent of GDP, 10 percent of employment, and 4 percent of GDP in foreign currency earnings.\n- Immediate effects included a sudden stop in tourism, a temporary decline in domestic activity due to partial lockdowns and capacity restrictions, and a stretched government budget as tax revenues fell.\n- Egypt experienced capital outflows of more than $15 billion during March-April 2020.\n- Despite these shocks, Egypt experienced a positive growth rate in 2020, attributed to a short period of lockdown, a relatively diversified economy, and timely policy responses." }, { "heading": "Government policy response and domestic measures", "content": "- Reforms implemented since 2016 under the 2016-19 Extended Fund Facility (EFF) provided sizable buffers prior to the pandemic; measures included:\n - Floating the exchange rate to eliminate currency overvaluation.\n - Fiscal consolidation to reduce public debt.\n - Energy subsidy reform to address a key fiscal risk and create space for social spending.\n - Structural reforms to strengthen the business climate, attract investment, and increase employment opportunities, particularly among youth and women.\n- Fiscal support measures during the crisis included:\n - Relief to businesses and workers in hardest-hit sectors such as tourism and manufacturing.\n - Postponement of tax payments.\n - Expansion of cash transfer programs to poor households and irregular workers.\n- Central Bank of Egypt measures during 2020:\n - Reduced policy interest rates by 400 basis points; overnight deposit rate cut from 12.25 percent to 8.25 percent.\n - Introduced initiatives to reduce pressure on borrowers and ensure liquidity, including increased access to credit at preferential interest rates and a six-month debt moratorium on existing credit.\n - Objective: ensure smooth credit flow and alleviate pressures in domestic financial markets." }, { "heading": "IMF support and program specifics", "content": "- The IMF provided about $8 billion in financial support through a two-pronged plan:\n - The Rapid Financing Instrument provided $2.8 billion in May 2020 for emergency foreign currency needs.\n - The Stand-by Arrangement (SBA), approved in June 2020, provided access to about US$5.4 billion over the subsequent 12 months.\n- Program objectives and outcomes:\n - Helped maintain economic stability and rebuild international reserves drawn down in response to the crisis.\n - Supported progress on structural reforms to strengthen public finances, fiscal transparency and governance, and laws to improve the business climate.\n - Policies sought a balance between supporting the economy through the COVID-19 shock and ensuring debt remains sustainable to maintain investor confidence.\n- As a consequence of government policy and IMF support, growth was expected at 2.8 percent for FY 2020/21." }, { "heading": "Outlook, challenges, and priorities", "content": "- Growth projection:\n - Growth is expected to rebound to 5.2 percent in FY2021/22.\n- Key uncertainties and vulnerabilities:\n - Outlook is clouded by uncertainty related to the pandemic, including full recovery of tourism.\n - High public debt and large gross financing needs leave Egypt vulnerable to external shocks, such as higher global borrowing costs as developed economies withdraw economic stimulus.\n- Policy priorities and recommended reforms:\n - Continue preserving economic stability and reducing public debt.\n - Focus on structural reforms to encourage private-sector-led growth, including:\n - Policies to increase revenue for financing health, education, and social safety nets.\n - Enhance governance and transparency.\n - Further develop financial markets.\n - Reduce the role of the state in the economy and ensure a level-playing field for all firms.\n - Improve the business environment and increase integration into global trade by reducing trade barriers and ensuring predictability of customs procedures.\n - The IMF will continue to support Egypt’s reform efforts as specific policy measures are defined and implemented.\n\nSource: IMF News — \"Egypt: Overcoming the COVID Shock and Maintaining Growth\" (July 14, 2021).\n\n---\n\n\n References\n\n- https://www.imf.org/en/News/country-focus\n- PRESS CENTER\n- Read the press release\n- FAQs\n- Egypt and the IMF\n- 2016-19 Extended Fund Facility (EFF)\n- Rapid Financing Instrument\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/07/14/na070621-egypt-overcoming-the-covid-shock-and-maintaining-growth" } ], "bullets": [ "[Markdown version](/en/news/articles/2021/07/14/na070621-egypt-overcoming-the-covid-shock-and-maintaining-growth/index.md)", "[Structured JSON version](/en/news/articles/2021/07/14/na070621-egypt-overcoming-the-covid-shock-and-maintaining-growth/index.json)", "[Bundle manifest](/en/news/articles/2021/07/14/na070621-egypt-overcoming-the-covid-shock-and-maintaining-growth/bundle-manifest.json)", "Published: July 14, 2021", "Tourism at the onset of the crisis accounted for around 12 percent of GDP, 10 percent of employment, and 4 percent of GDP in foreign currency earnings.", "Immediate effects included a sudden stop in tourism, a temporary decline in domestic activity due to partial lockdowns and capacity restrictions, and a stretched government budget as tax revenues fell.", "Egypt experienced capital outflows of more than $15 billion during March-April 2020.", "Despite these shocks, Egypt experienced a positive growth rate in 2020, attributed to a short period of lockdown, a relatively diversified economy, and timely policy responses.", "Reforms implemented since 2016 under the 2016-19 Extended Fund Facility (EFF) provided sizable buffers prior to the pandemic; measures included:", "Fiscal support measures during the crisis included:", "Central Bank of Egypt measures during 2020:", "The IMF provided about $8 billion in financial support through a two-pronged plan:", "Program objectives and outcomes:", "As a consequence of government policy and IMF support, growth was expected at 2.8 percent for FY 2020/21.", "Growth projection:", "Key uncertainties and vulnerabilities:", "Policy priorities and recommended reforms:", "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)", "[PRESS CENTER](http://presscenter.imf.org/)", "[Read the press release](https://www.imf.org/en/News/Articles/2021/06/23/pr21193-egypt-imf-execboard-completes-2ndrev-under-the-sba-concludes-2021aiv)", "[FAQs](https://www.imf.org/en/Countries/EGY/Egypt-qandas)", "[Egypt and the IMF](https://www.imf.org/en/Countries/EGY)", "[2016-19 Extended Fund Facility (EFF)](https://www.imf.org/en/Publications/CR/Issues/2019/10/10/Arab-Republic-of-Egypt-Fifth-Review-Under-the-Extended-Arrangement-Under-the-Extended-Fund-48731)", "[Rapid Financing Instrument](https://www.imf.org/en/About/Factsheets/Sheets/2016/08/02/19/55/Rapid-Financing-Instrument)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2021/07/14/na070621-egypt-overcoming-the-covid-shock-and-maintaining-growth/index.md", "json": "/en/news/articles/2021/07/14/na070621-egypt-overcoming-the-covid-shock-and-maintaining-growth/index.json", "bundleManifest": "/en/news/articles/2021/07/14/na070621-egypt-overcoming-the-covid-shock-and-maintaining-growth/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T00:33:10.427Z" }