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Thursday, 24 June 2021

Egypt's parliament to discuss amendments to bankruptcy law, pass new anti-coronavirus measures

Parliament will also discuss a new controversial law regulating the use of irrigation water

Gamal Essam El-Din , Saturday 13 Mar 2021
Egypt Parliament
Egypt Parliament (Photo: Khaled Mashaal)
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Following a two-week recess, Egypt's parliament – the House of Representatives – will get down to business on Sunday.
 
The House's schedule shows that economic and budgetary legislative amendments will dominate the debate this week.
 
On Sunday, the House will discuss long-awaited amendments to the bankruptcy law (law 11/2018).
 
A report prepared by the House's Economic Affairs Committee said that the new amendments aim to strike a balance between the interests of good-intentioned but ill-fated debtors on one hand and the interests of creditors on the other.
 
"This will help pave the way for stimulating the investment market in terms of creating a climate of confidence between debtors and creditors," said the report.
 
The report explains that the amendments to "the Law on Restructuring, Reconciliation and Bankruptcy Protection" mainly seek to help default and insolvent companies and investors settle commercial disputes outside courtrooms. 
 
"This comes through introducing a new mechanism of 'mediation' to help creditors and debtors reach a reconciliatory settlement of their commercial disputes without resorting to filing lawsuits in courtrooms," added the report.
 
Besides, the report said, the amendments also target extending a helping hand to default enterprises in terms of enabling them credit to overcome liquidity squeeze. 
 
"In this respect, the law will open the door to non-banking institutions to offer credit facilities to default enterprises and projects provided that these institutions get full information about the financial conditions of defaulters, prior to offering them any credit," the report read.
 
The legislative amendments would also allow debtors to request bankruptcy protection. 
 
"This would protect good-intentioned but ill-fated merchants from being declared bankrupt, keep their commercial reputation intact and create a climate of confidence on the investment market," said the report.
 
Also on Sunday, the House will discuss a legislative amendment to the 2020/21's state budget to help contain the negative impact of COVID-19 on the country's economic institutions.
 
A report prepared by the House's Budget Committee indicates that the legislative amendment to the 2020/21 budget will open a credit line of EGP 2 billion to be allocated to supporting the financial position of some of the country's economic institutions and units. 
 
"The coronavirus pandemic has negatively impacted the financial performance of these economic institutions and units in terms of stripping them of many of their revenues due to the partial or entire halt of their business activities and [therefore] weakening their financial capacities to either pay salaries or service their debts," said the report, adding that "as a result these institutions and units were forced to turn to the state to seek financial help and get credit." 
"So the 2020/21 budget would be amended to introduce an increase of EGP 2 billion to the allocations sector, to be offered to the negatively impacted economic institutions and units," as according to the report, indicating that "the new budgetary allocation will lead to widening the budget deficit by 0.03 percent of GDP."
 
The House's Sunday debate will also include discussing a Spanish grant estimated at 200,000 euros, with the objective of improving the administrative performance of the Ministry of Planning's National Institute of Governance and Economic Development.
 
Members of the House's Foreign Relations Committee will also meet on Sunday to conduct a dialogue with Minister of Foreign Affairs Sameh Shoukry. The discussion with Shoukry will include serious issues such as, relations with Turkey and the United States as well as the recent developments on the Grand Ethiopia Renaissance Dam (GERD).
 
On Monday, the House will resume discussing a controversial law on water resources and irrigation works. The law - approved in principle two weeks ago - has triggered angry reactions as it states that farmers should pay money for irrigation water. The government said in a statement that the law will charge fees but only for the use of irrigation equipment on main water currents. 
 
"The amendments aim to rationalise the use of irrigation water, not to mention, that majority of farmers will not pay money as they use subsidiary water currents only to irrigate their agricultural fields," said the statement.
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