Central Bank of Egypt (CBE) has loan guarantees worth 100 billion Egyptian pounds to encourage banksbe part of an initiative offering loans of 8 percent decreasing interest rate to private investors in the sectors of manufacturing, agriculture, and constructions.
The initiative is within a package of measures taken to support the Egyptian economy, maintain the gains of the economic reform program launched in 2016, and back the private sector and businesses against the repercussions of coronavirus crisis.
The CBE governor said that the guarantees came as risk in businesses increased amid coronavirus, particularly in financial markets. He added that the initiative aims at funding businesses to make ends meet.
Amer clarified that CBE is a shareholder in a credit risk guarantee company it chairs, and that the company will offer the guarantees to banks. He explained that CBE will issue the guarantees this week to the company that in turn will provide the banks with 80 percent of loans’ value. As such, banks will only endure 20 percent of the risk.
The CBE governor pointed out that the company had guaranteed loans worth LE25 billion offered to SMEs’, and that its system will be modified to guarantee loans to large companies.
In December, CBE launched an initiative to finance the private manufacturing sector with LE100 billion at 10 percent diminishing balance rate. In March, the rate was reduced to 8 percent and the agricultural sector was included in the initiative. In May, the initiative has been expanded to include the constructions sector. The changes were driven by COVID-19 crisis.
