Banks operating in the local market are taking steps to support the local tourism sector, after the new initiative launched by the Central bank of Egypt (CBE) to alleviate burdens on workers in the field.
The steps taken by banks to support the tourism sector include postponing the instalments for overdue loans that were obtained by employees in the sector, pumping fresh funds to renovate tourism facilities, as well as promoting touristic areas to the banks’ clients, in particular Sharm El-Sheikh.
The CBE launched a new initiative aimed at supporting the tourism sector two weeks ago. The initiative included allowing banks to postpone repayments on consumer and real-estate loans obtained by the sector’s workers for six months, starting from October 2015, without applying interest on late payments for this period.
According to the CBE, the decision applies to workers in hotels, tourism projects, and the agents of travel and tourism operations. That is in addition to workers in overland travel, air transport, and the workers in restaurants, cafes and the entertainment businesses in the tourism areas.
The CBE asserted that it is important not to classify these loans as having defaulted, bearing in mind the delays in their wages due to exceptional circumstances.
In one of the first responses to the CBE’s initiative, the National Bank of Egypt (NBE) promptly approved the postponement of the loan settlements for a large number of customers working in the tourism sector who meet the initiative’s requirements. Their total debts amounted to about EGP 1.2bn, according to Yehya Abou El-Fotouh, an Executive Board Member at the bank who is responsible for the defaulted debts sector.
Abou El-Fotouh said the NBE further granted loans worth EGP 321m, as a contribution in funding the businesses of 45 hotels nationwide. The NBE has granted about 65% of the total value of loans granted to the tourism sector by banks.
The loans portfolio allocated to the tourism sector by the NBE amounts to approximately EGP 13bn, about EGP 7.5bn of which are defaulted loans.
In a similar step, Banque Misr decided to postpone the settlements of loans owed by customers working in the tourism sector until the end of next June. The value of these settlements is approximately EGP 600m. The bank is also studying pumping new funds to some hotels and tourism facilities to help them continue operating.
Supporting tourism in another way, the Housing and Development Bank (HDB) adopted an initiative aimed specifically at addressing the lagging tourism rates in Sharm El-Sheikh.
The bank called on a number of investors and clients to hold a meeting with the bank’s leaders in Sharm El-Sheikh to discuss the problems they face, propose solutions, and present the available investment opportunities.
Moreover, the bank organised an entertainment programme for its clients to inform them of the most important tourist attractions in Sharm El-Sheikh, in the presence of the governors of Red Sea, South Sinai, and Aswan.