Egypt's central bank terminates low-interest initiatives for private sector

Doaa A.Moneim , Wednesday 30 Nov 2022

The Central Bank of Egypt (CBE) has called off its low-interest initiatives for the private sector in the industry, agriculture, and construction fields, said CBE Deputy Governor Gamal Negm on Tuesday.

CBE
File Photo: Central Bank of Egypt s headquarters is seen in downtown Cairo. REUTERS

 

The initiatives had allowed the private sector to acquire loans with a decreasing eight percent interest rate.

However, the borrowing parties can still use their available balances in banks for short-term facilities based on market prices, Negm noted.

The decision was announced during a meeting by Prime Minister Mostafa Madbouly with CBE officials to follow up on the cabinet’s decree regarding transferring the management of low-interest rate initiatives from the CBE to relative ministries.

In November, the CBE sent a circular to banks operating in the Egyptian market announcing they will no longer manage low-interest rate initiatives, handing off the responsibility to the Ministry of Finance.

The beneficiaries will repay their dues for the short-term facilities they had secured over one year, Negm added.

Regarding the medium- and short-term credit facilities offered to the beneficiaries under these initiatives, Negm said the balances will continue to be disbursed within the approved maturities.

Meanwhile, the International Monetary Fund (IMF) is anticipated to review its Egypt Mission report in December to discuss for approval a new $3 billion loan for the country. The request was made in March to address the repercussions of the Ukraine war and maintain the gains of its economic reform programme.

During negotiations on the loan in August, Minister of Finance Mohamed Maait said the IMF had discussed the low-interest initiatives with the Egyptian authorities and refused the initiatives be moderated by the CBE.

Since March 2020, when the COVID-19 pandemic broke out, the CBE had issued several initiatives to support the most hit sector by the pandemic, extending its maturity and coverage to include more beneficiaries.

The CBE’s Monetary Policy Committee is expected to convene on 22 December, its last meeting in 2022, to review the key interest rates with projections expecting it may raise the interest rates and apply a new floatation on the Egyptian pound.

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