The European Bank for Reconstruction and Development (EBRD) has provided the National Bank of Kuwait (NBK) a fund worth $100 million for lending to private sector projects in the Egyptian market, aiming to tackle the economic impacts of the Covid-19 crisis, Minister of International Cooperation Rania Al-Mashat announced Sunday in a statement.
Al-Mashat clarified that the NBK will direct this fund for lending to the small and medium-sized projects in particular, which are witnessing a decline in their activities and sales, especially that those projects constitute an important component of the Egyptian economy that need help amid the current crisis.
She added that the fund came as a result of a panel that the ministry held with international development partners in April to discuss countering the economic implications of Covid-19, adding that it is "one of funds that were extended by other development partners to banks that are operating in the Egyptian market" to back up the private sector.
The EBRD said that it is dedicating all its activities for the time being to addressing the economic repercussions of the Covid-19 crisis, through its response and recovery programme to support emerging economies, according to the statement.
According to international cooperation ministry data, EBRD projects in the Egyptian market have reached 115 since the beginning of cooperation between the two sides in 2012, worth €6.5 billion in total, of which the private sector share constitutes 56 percent.
NBK is an Egyptian Joint Stock Company of the National Kuwait Bank, which is a partner of the EBRD since 2015.
On 13 May, the EBRD said in its regional economic outlook that Egypt’s GDP is expected to grow by 2.5 percent in the current FY2019/2020 and by three percent in FY2020/2021, on the back of the weak outlook in the tourism sector, disruptions in global value chains, weaker demand from trading partners, and the slowdown in foreign direct investment (FDI).
It added that large public construction projects and the boom in the telecommunications sector have so far sustained Egypt’s growth.
On the calendar year basis, according to the report, Egypt’s economic growth will drop by 0.5 percent in 2020, before rebounding to 5.2 percent in 2021.
The main risks to Egypt’s outlook arise from the need for a tougher lockdown should the spread of Covid-19 accelerate, and from the negative outlook in Egypt’s main trading partners, according the report, noting that measures to contain the spread of coronavirus will lead to a slowing of growth in the fourth quarter of FY2019/2020, which ends in June, and the first half of the next fiscal year, according to the report.
Growth in Egypt continued to accelerate in the first half of FY2019/2020, matching the rate achieved in FY2018-19, of 5.6 percent, driven by retail, industry and agriculture, in addition to oil refining, communications, construction and tourism, according to the report.
In an exclusive interview with Ahram Online, published 5 May, the managing director of the EBRD’s southern and eastern Mediterranean region (SEMED), Dr Heike Harmgart, stressed that Egypt, unlike many countries across the globe, will not witness a recession as a result of the Covid-19 crisis, but will witness a slowdown in economic growth.