Recent efforts to fortify and diversify the economy proved to be fortuitous given the emergence of the Covid-19 pandemic, which had severe effects on economies around the world as hospitals reached capacity, business activity slowed, and movement restrictions were placed on people and goods. The reforms provided Egypt with a more secure economic base for resilience in the face of external shocks, giving the country more operating room to address the intertwined health and financial emergencies of the pandemic.
After the currency crisis in 2016, Egypt implemented a series of reforms to strengthen its economic fundamentals. The most significant elements of this programme included shifting to a flexible exchange rate to restore equilibrium in the foreign exchange market; launching a three-year fiscal reform plan to reduce the budget deficit – which, at over 10% of GDP, was one of the highest in the region; dismantling an expensive fuel subsidy system; and creating a more equitable framework of social support mechanisms.
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