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Egypt's central bank allows local companies to repay forex debts on 1-3yr installments

Ahram Online , Wednesday 28 Dec 2016
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Mohamed Zaki El Sewedi Head of Egypt Federation of Industries and Chairman of parliament's Support Egypt majority coalition (Photo: Ahram)
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The Central Bank of Egypt (CBE) on Tuesday approved giving Egyptian companies an opportunity to repay their foreign currency debts in installments that range between one and three years, said the head of Egypt's Federation of Industries (EIF) Mohamed Zaki El-Sewed in a statement.

According to the statement, during a meeting between the EIF chairman, CBE governor and a group of bank directors, they agreed upon the possibility of setting a US dollar fixed exchange rate at each company's request and according to its agreement with the local lender that run its financial operations.

The statement called on all companies and factories not to declare bankruptcy based on debts resulting from the change of the exchange rate between the Egyptian pound and foreign currencies following the government's decision to float the local currency on 3 November.

The CBE directed the banking sector to allocate of EGP 10 billion with a 12 percent interest rate to support companies that generate revenue below EGP 1 billion per year, and another EGP 10 billion with the same interest rate for the industrial developers, spurring them to establish industrial zones for leases in order to support the youth and the economy of each governorate.

The meeting concluded with financing companies working in poultry, meat and dairy industrial projects with an interest rate ranging between 5,7 and 10 percent, aiming to lower manufacturing expenses and reduce costs on consumers.

A number of Egyptian investors took out a full-page advertisement on Tuesday in Egypt's Al-Ahram daily newspaper calling on President Abdel-Fattah El-Sisi to take "emergency measures" to save Egyptian companies and industries after the recent floating of the local currency.

The advertisement, signed by nine investors associations, explained that Egyptian companies are facing bankruptcy as they are required to pay back bank loans at the new exchange rate, even though they have already sold their products using the old exchange rate.

 

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