Pandemic postpones move to new Egyptian capital
CAIRO--With all the state institutions preoccupied with combating the coronavirus pandemic, the Egyptian government has been forced to postpone the implementation of a number of strategic projects and its move to the new administrative capital.
The Egyptian presidency announced March 28 that President Abdel Fattah al-Sisi has postponed the launch of major national projects, including the Grand Egyptian Museum, and that the transfer of government officials and employees to the new administrative capital has been rescheduled for next year due to the coronavirus outbreak.
The statement was issued following the meeting of the Egyptian president with state officials, including Prime Minister Mostafa Madbouli, to discuss the new measures for construction and building sites during the coming period.
The new national museum was scheduled to open this year and the relocation of the first batch of administrative services and employees to the new administrative capital was slated for June of this year.
“The President has ordered the postponement of the activities and openings of the major national projects that were supposed to be carried out during the current year 2020 to 2021, including the move to the new administrative capital, as well as the opening of the Grand Egyptian Museum and the Museum of Egyptian Civilisation, due to the circumstances and practical implications of fighting the spread of the new coronavirus, on a local or international level,” the statement read.
The Sisi government had previously announced its intention to transfer the country’s administration to the new administrative capital, approximately 45km east of Cairo, and which includes an airport as well as banking and business districts and residential and administrative facilities.
However, the project, which had cost $58 billion, has faced difficulties in raising funds in addition to the withdrawal of some investors.
According to previous data from the Ministry of Antiquities, “the construction of the Grand Egyptian Museum is taking place on an area of 117 feddans (a feddan equals 4,200 square metres) near the pyramids of Giza (west of the capital).”
The museum is considered one of the largest in the world and its construction had cost about $550 million. It was estimated that 4 million tourists per year would be flocking to the museum at a rate of 15,000 visitors per day.
Fears of the collapse of tourism in Egypt have gripped the local business community. Chinese tourists have disappeared, the Gulf countries have imposed a travel ban on their citizens and European countries curtailed flights in and out of Europe. All of these developments do not bode well for the Egyptian tourism sector and for Egyptian economy in general.
Fitch Ratings has previously warned that the shock of the coronavirus outbreak will affect Egypt’s external financial balances, shrink its foreign currency revenues and lead to a decline in GDP growth.
The agency said in a report that the disruption of the tourism sector in Egypt and the possibility of the export sector being affected will have severe repercussions on public finances and that recovery from this shock will require a long time.
Fitch said that foreign remittances from Egyptian expatriates, which amounted to about $25 billion last year, could be seriously affected as well. It added that any growth in domestic demand will not be sufficient to prevent a significant increase in the current public deficit in general.
The Egyptian government had announced a package of measures to protect the economy from the global repercussions of the virus outbreak, including a 3% cut in interest rates, a reduction in energy prices for industrial use and a reduction in corporate income taxes.
The government approved allocating $6.37 billion to fund the nation’s “comprehensive” plan to deal with the epidemic. It also said that the decisions had already been taken several days before their announcement.
The Egyptian economy had shown signs of significant improvement before the outbreak of the pandemic. This improvement was the result of implementing comprehensive reforms over three years under a 12-billion-dollar IMF loan agreement.
Thanks to reforms like liberalising exchange rates and reducing government support, economic growth accelerated significantly, which boosted the confidence of foreign investors in the Egyptian economy.
Financial balances have improved greatly, the exchange rate of the Egyptian pound has stabilised and the country’s foreign exchange reserves have tripled, in addition to the recovery of the tourism sector.
However, the spread of the virus is now threatening all signs of recovery and the country’s financial balances, in light of the prevalence of cases of infections that exceed the declared official figures.