The government acted swiftly to implement financial measures to alleviate the economic effects of the pandemic. A LE100bn stimulus was announced in late March 2020, half of which went to the hard-hit tourism sector. The package laid out support for poor families and those affected financially by the crisis, including LE3bn in subsidies of LE500 per affected worker for three months; a six-month extension on credit repayments for all individuals and businesses; and soft loans for the manufacturing sector.
Importantly, the measure also included up to LE20bn for a stock-purchasing programme by the Central Bank of Egypt. Under the plan, the bank would buy shares listed on the Egyptian Exchange (EGX) to support asset prices amid sustained market volatility and sell-off. The financing was equivalent to more than 5% of the market capitalisation of the EGX100 index. Also in March, the central bank lowered the preferential interest rate from 10% to 8% for loans to small and medium-sized enterprises, those in the industry and tourism sectors, and low- and middle-income families for housing.
The central bank took additional measures to support the economy during the health crisis. In November 2020 it cut interest rates for a second time to bolster local businesses, reducing the overnight lending rate from 9.75% to 9.25%, and the overnight deposit rate from 8.75% to 8.25%. The authority had cut rates the month before amid stabilising inflation. The body also lowered the cost of transactions on the EGX from 0.15% to 0.125% for non-residents, and from 0.15% to 0.05% for residents, as well as exempted spot transactions from stamp duties.
Tax measures including extensions, deferrals and moratoria were similarly implemented to help those affected by the pandemic. The suspension of capital gains taxes for residents on securities listed on the EGX was extended from May 17, 2020 to January 1, 2022. Moreover, firms in industry and tourism were given a three-month extension on property taxes.
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