25 FEBRUARY 2021

Egypt: 2021 and Beyond

Ladies and gentlemen,

• It gives me great honor and pleasure to welcome you all here today, those who are participating virtually and physically and thank you AmCham Egypt team for organizing this major event.

• I would like to praise the excellent longstanding partnership with AmCham, and the essential role of the board members and corporate partners in strengthening our bilateral ties. I wish you all a happy and successful year 2021.

• I think we all agree that 2020 was an exceptional year for all of us; the Covid-19 pandemic has affected and continues to affect all aspects of our lives. It is causing the most severe global health and economic crisis in at least seven decades.

• In Egypt, the pandemic actually started in March 2020 and interrupted a period of macroeconomic stability, high growth rates, continued decrease
of inflation rates, resulting from the successful implementation of our economic reform program undertaken in collaboration with the IMF.

• Before the outbreak of the Corona virus, economic growth was approaching 6%, until the corona crisis emerged and caused the decline in many economic indicators just like any other country.

• Despite this relative decline, recent reform efforts and the diversification of our economy helped the Egyptian economy becoming more flexible and able to absorb external shocks. Therefore, Egypt became the only economy in the region and among few economies in the world that achieved positive economic growth rates in light of the crisis.

• The Government put the health of Egyptians first; we have taken an early proactive approach to deal with the pandemic at its various aspects; the
tough challenge was to maintain the balance between preserving the public health while keeping the economy running and avoiding a full lockdown.

• Our aim was to slow down the transmission and flatten the curve of the cases. In this regard, we chose to adopt a partial lockdown depending on the scenario at hand, enforcing mask-wearing, encouraging working from home and online education, and establishing adequate treatment protocols.

• We promptly worked in close cooperation with all stakeholders, citizens, business community, and NGOs. We started by launching an official awareness website “care.gov.eg” as well as “Egypt’s Health” mobile app to make all information related to the virus easily and timely accessible to all citizens.

• The Government issued a comprehensive report about the measures taken to confront the pandemic and was submitted to AmCham Egypt last November.

• In our response to the pandemic, we have accelerated our preventive measures according to the number of detected cases to halt the spread of the virus during the first wave and in this regard various steps were taken at different levels with the aim to protect the lives of our citizens and to reduce the economic and social implications of the pandemic, it includes, among others, the following:

- The allocation of EGP 100 billion (around $6.3 billion) to finance the state’s plan to mitigate the repercussions of the virus and contain its spread.

- I would like to stress the fact that our banking system showed remarkable resilience, the CBE has allocated EGP 50 billion for the real
estate financing initiative for middle-income people, and raised EGP 20 billion to support and stimulate the Egyptian stock market.

The CBE as well has taken a number of measures to offset the impact of the pandemic mainly by
reducing the overnight deposit rate by 300 basis points to 9.25%; deferring all credit dues for all customers whether corporates, SMEs, and individuals (retail loans, and mortgage loans for personal housing) for a period of 6 months and cancellation of fees and commissions applied to the cash withdrawal from ATMs and E-wallets for a period of 6 months starting March 2020.

- A complete system of testing and tracing the cases was put in place in a matter of a few weeks and we tried our best to quickly upgrade and equip the isolation hospitals, strengthening its capabilities, its functionality and sustainability as well as optimizing its scarce resources to service the infected citizens and vulnerable groups. We are currently continuing our task in this regard to keep this system functioning and robust.

I would like here to highlight that our healthcare system has been under continuous developments during the last four years since the launch of the Presidential campaign “100 Million Healthy lives 100 ????? ??? ” for the treatment and early detection of hepatitis C virus (HCV) and non-communicable diseases (NCDs). Under this campaign, Egypt managed to screen over 50 million citizens for free in just few months and offer treatment for the infected ones also for free in the largest anti-Hepatitis C campaign ever in the world. Also, launching our new Universal Health Insurance System, with all the related works of upgrading and building health facilities contributed in containing the virus spread.

- Ensuring sufficient and safe reserves of strategic food commodities such as wheat, rice, oil and pasta for several months and securing all medical supply needs.

- The government was keen to mitigate the financial implications on the Egyptian economy, emergency financial support was allocated to the tourism and civil aviation sectors as they are the two most affected sectors, and we allowed hotels to operate later at a 50% occupancy rate, on condition of obtaining “Health safety” certificate.

- As for the business community, we have reduced electricity and natural gas prices for the industry sector, an additional EGP 10 billion were allocated to pay the dues of contractors and suppliers, and an additional EGP 3 billion pounds were arranged to pay the dues of the export support program (a total amount of EGP 30 billion was paid), granting exemption for foreign investors from paying capital gains tax and suspending its payment for resident shareholders until 2022.

- The Government provided direct financial support to Egyptian citizens and specially the lower-income families and the irregular workers by
initiating an exceptional grant with a total amount of 1500 pounds divided into three installments, and distributed to over 1,6 million worker through 4000 post offices nationwide.

- Expanding the Cash transfer program "Solidarity and Dignity /Takaful and Karama" by adding 142 thousand new families from the most vulnerable categories, while the total services and subsidies provided by the Ministry of Social Solidarity, associations and civil institutions amounted to about 20 million services, at a total cost of EGP 1.7 billion.

• I would say that the infected numbers are currently under control and we are dealing with any new update instantly and there is no doubt that the development of several vaccines is a one good start to end the Covid-19 nightmare, Egypt has so far contracted - within the "Kovacs" coalition - on vaccine doses and we have received shipments of Corona vaccines and already started our vaccination process.

• In parallel, the pandemic has demonstrated the importance of digitalization in all areas of life. The majority of the public and private institutions adopted digital solutions and here I would like to mention our efforts in keeping the education system running by having all teaching undertaken virtually.

• As part of our plans to coexist with the virus, Egypt began the move towards a gradual reopening of its economy in June easing pandemic-related restrictions, including lifting the night-time curfew, reopening restaurants and places of worship, and resuming regular international flights.

• Our economy kept its strong position facing the negative impact of the pandemic compared to other countries in the region and worldwide with a growth rate of 3.6%.

• We managed to reduce the unemployment rate to 7.2 % in the fourth quarter of 2020, compared to 12.7% before implementing the structural adjustment program.

• The poverty rate also witnessed a remarkable decline during the fiscal year 2019/2020, for the first time in 20 years as it decreased to about 29.7%, compared to about 32.5% during the fiscal year 2017/2018.

• The government succeeded in bringing down the Inflation rate to a record level despite the coronavirus crisis, owing to controlling food prices, where inflation recorded 5.7% during the FY 2019/2020, which was considered the largest annual decline in the inflation rate in emerging markets in 2019/2020.

• The Balance of Payments had started achieving surpluses once again, as net international reserves increased to US$ 40,1 billion by the end of January 2021, compared to US$ 16,5 billion by the end of December 2015.
Ladies and gentlemen,

• It is true that 2020 was a hard year but we are currently focusing on regaining our pre-pandemic levels and realizing our development plans according to our priorities.

• Egypt has been working diligently on preparing and implementing sustainable infrastructure projects including upgrading our ports, railways and roads networks, extending our water and sanitation facilities to underserved regions, creating new modern cities such as the New Administrative Capital and Al-Alameen City, and establishing new economic/logistical zones.

• We are currently directing more resources and efforts to turn the Suez Canal Zone into a regional logistic and manufacturing hub that can further enhance and facilitate trade between Asia, Europe and Africa.

• I would like to stress that Egypt’s strategic objective is to become a leading energy hub in the region. This entails having reliable energy sources and efficient energy mix. Thus, we are working persistently to secure around 20% of our power generation from renewable sources by 2022.
I must refer here to one of the largest solar plants in the world “BenBan Solar Park” implemented in partnership with the private sector and located in Aswan governorate in the south with a total capacity of 1465 MWp.

• The year 2019 also witnessed the launching of the East Mediterranean Gas Forum in Cairo, in testimony of Egypt’s status as a regional hub of natural gas which became later an established international organization. It serves as a regional platform for coordination and dialogue with representatives of key companies in this industry.

• In this context, we are currently applying a “Green Initiative” with a target to convert 150 000 old vehicles to natural gas in three years, instead of, or along with, gasoline, the plan is meant to preserve the environment and make use of the country’s new increases in natural gas production. This ambitious initiative will require the development of gas stations and all related infrastructure.

• We are giving a great attention to alleviate the living conditions of the most vulnerable communities for the next 3 years; therefore we launched a second phase of "Decent Life ???? ????? " initiative in January 2021 in cooperation with NGOs, targeting 1500 villages in the rural areas by providing poorest villages with increased access to the basic services such as: health, education, water and sanitation.

The initiative will allow us to expand job opportunities in the targeted areas as well as help youth to establish small businesses as we believe that these areas deserve to maintain economic empowerment and sustainability.

• We strongly believe in the need for creating an environment that is conducive for more active private sector participation in promoting economic growth.

• We believe that mobilizing adequate private capital is necessary to achieve high and inclusive growth over the medium term and help us maintaining and safeguarding macroeconomic stability, further upgrading and modernizing our infrastructure base, through injecting new investments.

• We exert continuous efforts to improve the investment climate through economic, financial and institutional reforms, most notably the issuance of the Investment Law and its incentives and facilitations to become more competitive and able to attract capital and remove any obstacles facing the investors.

• As for investment figures, U.S. total investment in Egypt reached $22.8 billion till June 2020 and over 1600 companies operating in Egypt that include American investors in various sectors namely services, oil and gas, manufacturing and finance.

• While this is a relatively promising figures, we look forward to mobilizing much more direct investments from the Unites States to Egypt, and we always support and encourage US companies to expand and double their businesses in Egypt and there is no doubt that these companies will bring-in technology and know-how, and their deep involvement in Egyptian economy is a reflection of the strategic relationship between our countries.