The government of Egypt took very quick and responsive immediate actions trying to reduce the immediate impact of the Covid-19 outbreak. The situation in Egypt is relatively, till date, acceptable relative to other countries with an aggregate number of 3,659 confirmed cases and 276 deaths as of 22 April 2020. The immediate actions are broadly classified into health sector initiatives, liquidity measures, fiscal actions and debt restructuring actions.
Health sector initiatives
These include efforts of social distancing and funds to support the health situation as follows;
- Temporary closure of all schools, universities, airports, rituals and activities, restaurants and coffee shops (allowing for restricted delivery service)and government institutions, other than the ones require to provide health and food services/products, and meetings from mid March till 23 April, 2020, subject to extension depending on the situation. The only exceptions are groceries, supermarkets, pharmacies and hospitals/health centers;
- impose nationwide night-time curfew and stopping of all mass transportation during the curfew period, closure of schools and universities, from 7-8 pm to 6 am, until further notice;
- Measures to limit the number of government employees going to work and encouraging through a media campaign and speeches by Prime Minister and President for virtual remote working, social distancing and staying home.
- Provide direct monetary support amounting to EGP 187.6 million to the Ministry of Health, distributed as EGP 153.5 million for medical supplies and preventive measures, and EGP 34.1 million as bonuses to workers in the health care system;
- Increase public expenditure on health in the budget.
These refer measures to increase liquidity in the market at both national and sector level and st sectoral level, as follows;
- Reduce the overnight deposit and lending rate and the discount rate by 3% at once in order to create finance accessibility and reduce the cost of borrowing;
- Support to most affected sectors, to include;
- Allocate EGP 50 billion fund to be directed for 2 years loan facility to the tourism sector at subsidized interest rate for ;
- Provide credit facility to pay employees salaries in the tourism sector to be repaid on a period of 2 years, with grace period of 6 months for new and replacement projects;
- Exclude necessity goods from need to raise 100% cash cover for importation;
- Allocate EGP 20 billion fund to support the capital market;
- Subsidize the electricity and natural gas tariffs for the industrial sector;
- Reduce lending interest rate from 10% to 8% for the industrial and tourism sectors.
- Allow cash subsidies for season al workers amounting to EGP 500 per person;
- Facilitate access to credit facilities for working capital and removal of some credit restrictions;
- Payment of EGP 1 billion of export subsidy arrears and facilitate export procedures.
This include tax exemptions and public expenditure at both national and sectoral levels;
- Proceed with mega infrastructural projects;
- Provide 3 month tax relief for Real Estate taxes for tourism and industrial sectors;
- Allow 3 months installments for income tax for corporate companies for all affected sectors;
- Allow delay in submission for individual tax reports to 9 April from 31 March;
- Increase the exemption tax limit for employees from EGP 8,000 to EGP 15,000;
- Annual raise of public sector and state employees by 7% and 12%, respectively and for pensions by 14%;
- Tax reduction for the capital market to include removal of stamp duties, postponing capital gains to January 2022, and exemption for foreign investors and reductions of dividends taxes from 10% to 5%.
Debt restructuring actions
- Delay of settling credit dues for individual banking loans (retail) for a period of 6 months and allow for loans up to 50% instead of 30% of monthly income;
- Removal ATM withdrawal limits for credit cards and principal dues for credit cards for a period of 6 months;
- Initiation of debt relief for amounts at risk of default on debt with amounts less than one million EGP;
- Allow grace period for mortgage lenders, factoring and leasing companies for 6 months;
- Write-off EGP 17 billion from 226 distressed firms.
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