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CBE should lower interest rates for stalled factories: Cairo Cotton Chairman - Daily News Egypt

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CBE should lower interest rates for stalled factories: Cairo Cotton Chairman

EGP 400m fund to support inoperative factories


The Central Bank of Egypt (CBE) should coordinate with bank methods of resolving the issue of stalled factories, Chairman of Cairo Cotton Centre Magdy Tolba said.

Banks can lower the interest rates and reschedule loans in order to help insolvent factories, which exceed 7,000 factories, he said in statements to Daily News Egypt.

After the 25 January Revolution in 2011, a huge number of factories suffered from a decrease in production. Many cases of stalled factories are based on administrative problems while others were affected by the market recession and the increase in production costs. However, the former government said previously that around 87% of factories had become insolvent due to funding issues.

Taking steps to resolve the issue, the government will increase the capital of a fund to EGP 400m, which was created to support and operate stalled factories and will be launched before the end of 2015, according to Hani Sarie Eldin, a legal adviser for the fund.

Sarie Eldin anticipates that the fund’s capital will exceed EGP 400m over 2016, especially in light of the attention of several parties and their willingness to contribute to the fund.

The Ministry of Industry recently agreed with Industrial Modernisation Centre (IMC) and the Ministry of Planning, represented by the National Investment Bank, to contribute to the initial capital of the fund in equal shares among the three parties. The Ministry of Industry will contribute a share in the fund’s capital through its allocations in the state budget.

The IMC is the entity overtaking the file. In September, head of the IMC Ahmed Taha said they currently have no more than 870 files and there are no official statistics of the number of inoperative factories.

“The problem is that not all those who applied to IMC were affected after the revolution. There are factories that have not been working since the 1990s and when we filtered the request, we found out that only 37 factories are eligible for IMC support,” Taha added.

There are about 1,600 stalled factories, according to latest figures by the Cental Auditing Organisation.

 

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