Egypt growth to continue with support

Given it is the most populous Arab country, with 42,980 confirmed Covid-19 cases and 1,484 deaths out of 100 million people by 14 June, Egypt has not been as severely hit by the pandemic as others in the region.

The economic outlook is also relatively favourable. In the IMF’s April 2020 projection, Egypt was the only country in the region projected to have a positive GDP growth rate this year, at 2 per cent.

Project activity has been a bright spot for the Egyptian economy in recent years and spending is expected to continue with foreign funding

International investment, financial support and tourism will be crucial for the IMF’s forecast to be realised.

One of the key short-term issues for Cairo is a $5.2bn loan from the IMF. In early June, Egypt and the IMF agreed to a 12-month stand-by arrangement (SBA), which has given the government much-needed fiscal breathing space.

Foreign investment

Project activity has been a bright spot for the Egyptian economy in recent years and spending is expected to continue with foreign funding.

Egypt’s first nuclear project is proceeding with $25bn in Russian funding secured back in 2017. Other investors, notably from the GCC, Japan and China, are investing in other projects in sectors ranging from real estate to rail.

The most recent announcement came in late May, when Minister of Petroleum & Mineral Resources Tarek el-Molla launched a $19bn plan for the country’s petrochemicals sector that will be supported financially by the US International Development Finance Corporation and the US Export-Import Bank.

The petrochemical plans follow the development of the Zohr field, which allowed Egypt to resume gas exports in 2019.

Another crucial source of foreign revenues is tourism. In 2019, the sector employed about 3 million Egyptians and accounted for about 20 per cent of GDP. Plans are now being prepared to reopen resorts, and some foreign tourists will be allowed back to coastal areas from 1 July.