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Thursday, 15 April 2021

Egypt’s central bank extends facilities for defaulting tourism companies owing to coronavirus

Presidential orders were given to alleviate the woes of the hard-hit tourism sector, the CBE said

Doaa A.Moneim , Monday 4 Jan 2021
CBE
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The Central Bank of Egypt (CBE) has extended for six months two initiatives focused on the tourism sector. The initiatives are meant to support the sector that has been ailing under the coronavirus.

Due to have expired by the end of 2020, the initiatives will end by late June 2021.

The first initiative removes tourism companies, with debts less than EGP 10 million and without marginal returns, from blacklists, drops lawsuits against them, and drafts guarantees on their debts.

The initiative stipulates that each company has to repay part of the total debt value determined according to the company’s cash inflows and the CBE’s case study for each company.

The other initiative targets defaulting tourism companies, with debts more than EGP 10 million and without marginal returns, from blacklists, drops lawsuits against them, and drafts guarantees on their debts.

In return, the companies have to repay at least 50 percent of their debt.

The CBE said the extension of the two initiatives was based on President Abdel-Fattah El-Sisi's directives to the government and the CBE to roll out bailout packages to support the economy amid the ongoing crisis and alleviate the woes of the hardest hit sectors.

The initiatives also aim at re-engaging defaulting tourism companies with the banking system.

In December, the CBE extended a number of other facilities for the tourism sector and its workers for six months due to the pandemic outbreak.

The grace period of loans of tourism sector workers have been extended to the end of 2021, and the first instalment will mature in January 2022, according to the CBE.

On 23 March, the CBE allowed banks to extend credit facilities through which clients can repay their loan instalments over two years with a grace period of six months as a response to the harsh impacts of the pandemic that hit the Egyptian economy.

The move aimed at providing enough money to help workers in the tourism sector pay wages and fulfil their financial obligations.

In June, the CBE approved an initiative launched by the finance ministry in May to support the tourism and hotels sector against the severe repercussions of the pandemic in response to President Abdel-Fattah El-Sisi's orders.

The initiative included offering an EGP 3 billion insurance credit for the CBE to give to national banks to provide three-year loans to hotels and tourist facilities with a discounted interest rate of five percent.

The CBE raised the maximum limit for loans based on the salary of the workers who benefit from the initiative to EGP 25,000, instead of EGP 15,000.

Meanwhile, the CBE announced it has extended another initiative to back the tourism sector for an additional year to be concluded by the end of 2021.

The CBE said the beneficiaries will be allowed during this year to file their requests to delay their obligations for banks for a maximum of three years, adding that banks will approve the requests after considering each case.

It has also extended the initiative to provide retail loans for tourism sector workers for one year, ending in December 2021.

Within this year, banks are allowed to delay the maturity date of loans obtained for consumption purposes as well as the real-estate loans for six months, starting from the maturity date.

Only clients who are committed in their payments can benefit from this action, according to the CBE.

In December 2019, prior to the outbreak of the pandemic in Egypt, the CBE had announced a large financing plan to support the tourism sector, which included increasing the value of its initiative to renovate and develop hotels from EGP 5 billion to EGP 50 billion.

In March, in response to the pandemic, the CBE instructed all banks to introduce further measures supporting the tourism sector, including introducing credit facilities for tourism enterprises to be paid over a maximum of two years with a six-month grace period.

 

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