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CBE issues EGP 100bn stimulation for private sector borrowing: Amer - Daily News Egypt

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CBE issues EGP 100bn stimulation for private sector borrowing: Amer

Initiatives are to help Egypt’s economy overcome ongoing pandemic


The Central Bank of Egypt (CBE) has decided to issue guarantees worth EGP 100bn to stimulate bank lending to the private sector, CBE Governor Tarek Amer has announced.

The CBE decision comes under its recently announced Industry, Agriculture and Contracting Support Initiative, which comes at a decreasing rate of 8%.

The CBE’s decision to support the initiative is to ensure finance is pumped into the Egyptian market for company’s to achieve their economic goals.

The initiative was set up as part of measures to support Egypt’s economy and maintain the achievements of the government’s economic reforms. It is also aiming to assist the country’s private sector in facing the repercussions of ongoing global coronavirus (COVID-19) pandemic.

Talking to the Middle East News Agency (MENA), Amer said the guarantees are designed to counteract the high business risks markets are currently facing due to the ongoing health crisis.

With the CBE’s guarantees in place, banks will be motivated  to steer loans towards private sector companies to ensure their financial solvency and reduce unemployment.

Amer stated that the issuance of these guarantees will be through the Credit Risk Guarantee Company headed by the CBE.

He also revealed that the CBE will issue guarantees this week for the Credit Risk Guarantee Company. This move will enable it to guarantee that banks operating in Egypt can cover the Industry, Agriculture and Contracting Industry Initiative loans.

The company will issue guarantees amounting to 80% of any loan used by banks, while the banks will bear only 20% of these risks.

Amer said the Credit Risk Guarantee Company has so far carried out loan guarantee operations in favour of small- and medium-sized enterprises (SMEs) worth EGP 25bn. The company’s system will also be modified to allow it to add loan guarantees for larger companies.

In December 2019, the CBE issued several initiatives to support Egypt’s economy, including an EGP 100bn initiative supporting the industrial private sector funding, at a rate of 10%.  In March, the CBE added the agricultural sector under the EGP 100bn initiative umbrella, reducing its interest to a declining 8%.

Last week, the CBE announced that it will be adding the contracting sector to the initiative, as part of its measures to support Egypt’s economy during the ongoing coronavirus pandemic.

Rami Aboul Naga, Deputy Governor of the CBE, said in statements earlier this week that the CBE had issued initiatives worth over EGEP 500bn. The initiatives are designed to help companies overcome the current situation and maintain employment, and include the tourism, real estate, industry, agriculture, and contracting sectors.

Other CBE initiatives have seen loan instalment payments postponed, company and individual blacklists cancelled, and debts waived.

Topics: CBE Tarek Amer

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https://dailyfeed.dailynewsegypt.com/2020/05/19/cbe-issues-egp-100bn-stimulation-for-private-sector-borrowing-amer/
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