Low Interest Loans for Corona Crisis Sectors </p><div> <p>The Middle East News Agency quoted the governor of the Central Bank of Egypt as saying that the bank would provide 100 billion Egyptian pounds (6.36 billion dollars) in loan guarantees to banks to encourage corporate lending during the Corona virus crisis.
Governor Tariq Amer told the official agency that the decision comes at a time when business risks are growing, especially with regard to companies and finance. Loans carry 8% interest, which reduces the central bank’s main lending rate of 10.25%.
The Corona virus affected the Egyptian economy, especially with the almost complete halt of tourism, as the sector constitutes 5% of the gross domestic product, as well as the closure of restaurants and cafes since last March.
Amer announced that the Central Bank’s decision to issue guarantees to banks comes in light of the high risks of business in the markets in light of the current circumstances, especially with regard to companies and finance, and also aims to help initiatives to pump loans to companies to achieve their economic goals. He added that the decision will contribute to motivating banks to pump loans to economic private sector companies in order to maintain their entities and their financial solvency and employment.
He explained that the issuance of these guarantees will be through the credit risk guarantee company in which he contributes and is headed by the central bank, in order to cover the banks in these risks. He revealed that the Central Bank will issue guarantees this week to the Credit Risk Guarantee Company, which enables it to guarantee banks operating in Egypt to cover the loans of the Industry, Agriculture and Contracting Initiative in full at an amount of 100 billion pounds, and that the company issues guarantees to banks amounting to 80% of the amount of any loan employed by banks , While the percentage of banks will bear only 20% of these risks.
The Governor of the Central Bank pointed out that the credit risk guarantee company has carried out loan guarantee operations for small and medium projects worth 25 billion pounds (1.6 billion dollars) so far, revealing that the company’s articles of association will be modified to allow them to add loan guarantees to large companies.
In December of last year, the Central Bank of Egypt issued several initiatives to support the economy, including an initiative to support the financing of the industrial private sector at a value of 100 billion pounds, at a 10% rate of dwindling, before returning in March to include the agricultural sector and reduce its interest to 8%. Declining, and last week it was announced that the contracting sector would be included in the initiative as part of the central measures to support the various sectors of the Egyptian economy in facing the repercussions of the Corona virus.
Rami Abu Al-Naga, Deputy Governor of the Central Bank of Egypt, said in statements to him earlier this week that the “Central” issued initiatives worth more than half a trillion pounds in order to help companies in various sectors to overcome the current conditions and maintain employment, and those initiatives included the sectors of tourism, real estate and industry Agriculture and contracting, as well as other initiatives to postpone loan payments, cancel black and negative lists of companies and individuals, and forgive debts.
In separate statements, Dr. Hala Al-Saeed, Minister of Planning and Economic Development in Egypt, explained that Egypt is affected, like other countries, by the Corona crisis, noting that the two different points of the Egyptian economy are represented in the presence of a strong economic reform program, which made the Egyptian economy and its indicators of rates Good growth, unemployment and inflation. She added that if that crisis had occurred in 2016 before the start of the economic reform program, the situation would have become very pressing on the Egyptian economy.
She touched on the proactive measures taken by Egypt to provide a financial package worth one hundred billion pounds … stressing that all sectors were at their best levels until last March 2020.