Egypt, COVID-19, and the economy: A combustible mix?

A member of medical team is seen beside a banner for the Egyptian President Abdel Fattah el-Sisi, as he sprays disinfectant as a precautionary move amid concerns over the coronavirus disease (COVID-19) outbreak at the underground Al Shohadaa "Martyrs" metro station in Cairo, Egypt March 22, 2020. REUTERS/Mohamed Abd El Ghany

Content from the Brookings Doha Center is now archived. In September 2021, after 14 years of impactful partnership, Brookings and the Brookings Doha Center announced that they were ending their affiliation. The Brookings Doha Center is now the Middle East Council on Global Affairs, a separate public policy institution based in Qatar.

Egyptians, known throughout the Middle East and North Africa (MENA) region for their flamboyant Ramadan celebrations, are experiencing a more subdued month of fasting this year. If the lack of merriment were the only casualty in the time of COVID-19, it might be tolerable. But the expected economic and social fallout is daunting.

The International Monetary Fund (IMF) expects the MENA region to contract by 3.3 percent in 2020, compared to last year’s projected growth of 0.3 percent. In an April report, the World Bank concluded that MENA, more than any region in the world, is experiencing two convergent shocks: the spread of COVID-19, which has placed unprecedented strains on health systems and governments, and the collapse in the price of oil. The report states: “The MENA region is particularly vulnerable. MENA scores second-lowest among all regions in the overall Global Health Security Index, while ranking last in both ‘epidemiology workforce’ and ‘emergency preparedness and response planning.’” World Bank economists now predict that output in the MENA region will decline in 2020, in contrast to an October 2019 prediction of 2.6 percent growth. 

Dealing with the double crisis 

For Egypt, the Word Bank report forecasts a significant decline in real gross domestic product (GDP) growth to 3.7 percent, compared with 2019 GDP growth of 5.6 percent. And World Bank economists emphasize the uncertain times ahead. In the same report, Egypt’s GDP predictions of decline worsened from 0.3 percent to -2.1 percent within just a two-week span, from March 19 to April 1, 2020. Part of the reason for the lack of growth is a decline in tourism. Also hit have been remittances from Egyptian expatriates working in Gulf countries, where COVID-19 has shut down all sorts of businesses, leading to massive layoffs. 

Before COVID-19, the deep repression carried out by President Abdel-Fattah el-Sissi’s government – including the arrest, torture, and even murder of opposition figures – was often overshadowed by apparent improvements in the economy. The Egyptian government launched a reform program in 2016, which involved devaluing the currency and cutting subsides, as part of an agreement with the IMF. Christine Lagarde, former managing director of the IMF, praised the progress Egypt’s government was making. In a January 2019 statement, she said: “Its growth rate is now among the highest in the region, the budget deficit is on a declining trajectory, and inflation is on track to reach the Central Bank of Egypt’s target by the end of 2019.” 

Considering that the West has been eager to turn a blind eye to the human rights violations of one of MENA’s worst autocrats in part because of his economic successes and his clampdown on the Muslim Brotherhood, then what will happen now that COVID-19 is charting a darker economic future for el-Sissi? El-Sissi’s government has escaped penalty for its human rights abuses because, once again, Western governments prefer to tolerate authoritarianism rather than risk instability. 

The IMF seems to be coming to the rescue, again. Global institutions are motivated to keep Egypt stable because it is the most populous country in the MENA region and one that the West considers strategically important, in part because it borders Israel. U.S. President Donald Trump, in particular, considers el-Sissi to be an important ally in the battle against extremist groups, such as the Islamic State (ISIS) and al-Qaida. The IMF has historically been influenced by Washington’s policies and is often reluctant to take action that would contradict them.

Following a request from Egypt, the IMF announced in early May that Egypt would be awarded a $2.7 billion loan to deal with the economic downturn resulting from COVID-19 and to protect foreign currency reserves. On April 26, Kristalina Georgieva, Managing Director of the IMF, issued a statement: “Like many countries around the world, Egypt’s economy has been impacted by the COVID-19 outbreak, the related global recession, and financial markets turmoil. President el-Sissi and his government have responded quickly and decisively with measures to limit its spread and provide support to affected people and businesses.”

All quiet on the home front?  

Egyptian society, however, may reach the opposite conclusion. First, there is solid evidence the government is downplaying the extent of the virus outbreak. A correspondent from the British newspaper the Guardian asked Canadian scientists to examine the virus outbreak in Egypt and the scientists said the rate of infections was far higher than the government was acknowledging. As a result of the report, the correspondent was interrogated by Egyptian authorities and then fled the country to Germany out of fear she would be imprisoned. 

Second, ordinary Egyptians complain of poor living standards, despite the reforms launched with the IMF. The percentage of Egyptians living below the poverty line rose to 32.5 percent in the 2017/18 financial year, up from 27.8 percent in 2015/16, according to the government’s statistics agency. This means the national poverty line is 8,827 Egyptian pounds ($534) per year. And the decline in wages will certainly worsen, as businesses close due to COVID-19.

Third, there is a shortage of doctors, nurses, and medical supplies, with the pandemic having stretched the health care system beyond its limits. Because of low pay, physicians have left the country in droves, with around 10,000 leaving from 2016 to 2019 alone. According to an estimate by Egypt’s Medical Syndicate, out of a total of 220,000 registered medical doctors, around 120,000 work outside Egypt. Public hospitals are understaffed by some 55,000 nurses. According to the Arab Barometer, only 31 percent of Egyptians said they were satisfied with the overall performance of their government’s health care service in 2018/19, a 19-point drop since 2010.

Extensive research is being published on the relationship between the COVID-19 outbreak and political unrest and violence. In a report on the subject, the International Crisis Group wrote: “The global outbreak has the potential to wreak havoc in fragile states, trigger widespread unrest and severely test international crisis management systems.” 

Is Egypt a fragile state headed for nationwide political unrest? Probably not, due to government repression. The tools needed for social and political mobilization are curtailed on a regular basis: social media and other networking platforms are manipulated by the state during times of unrest; press freedom is virtually non-existent; human rights advocates have fled the country; and those oppositionists who dare to challenge el-Sissi’s government are harshly punished. 

In early May, el- Sissi moved to expand his powers further by adding new amendments to the emergency law, including banning or limiting public gatherings, even if they are unrelated to the public health risk created by COVID-19. According to the Armed Conflict Location & Event Data Project (ACLED) which tracks political violence and protest in the developing world, the move appears to be in response to an increase in demonstrations over the past months. Thus, as the West’s mega financial institutions attempt to thwart an economic crisis, unfortunately Egyptians will continue to suffer even more as the pandemic continues.