CBE hands off responsibility for managing low-interest rate initiatives to Ministry of Finance

Doaa A.Moneim , Monday 21 Nov 2022

The Central Bank of Egypt (CBE) issued on Monday a circular to banks operating in the Egyptian market announcing they will no longer manage low-interest rate initiatives issued by the bank across several sectors in the country, handing off the responsibility to the Ministry of Finance

The Central Bank of Egypt (CBE) headquarters, Cairo, Egypt. AP


The circular comes in line with a decree issued by the prime minister on Saturday.

According to the circular, the CBE is also no longer responsible for refunding the price differences to the banks that are participating in these initiatives.

As of 19 November, the Ministry of Finance took over responsibility for establishing the rules for each initiative, setting the maturity for each, assigning the entity that will manage each initiative and assigning the body that will finance each initiative.

The action aims to benefit the public budget using the yields of these initiatives, according to the CBE.

Accordingly, the Ministry of Housing and Urban Development will be responsible for the real-estate financing initiative with decreasing-eight-percent interest rates that benefit the middle-income class, as well as the three-percent decreasing interest rate initiative dedicated to the low and middle-income classes.

Meanwhile, either the Ministry of Tourism and Antiquities or the Tourism Support Fund will be in charge of the tourism sector support initiative, with decreasing 11 percent interest rate.

The Ministry of Finance will also manage the initiatives converting petrol-operated vehicles to dual-fuel and supporting modern irrigation systems.

The International Monetary Fund (IMF) is expected to review its Egypt Mission report in December in order to discuss for approval a new $3 billion loan for the country that was requested in March to address the repercussions of the war in Ukraine as well as keeping the gains of its economic reform programme.

In August, when the deal was still in the negotiations phase, Minister of Finance Mohamed Maait said that the IMF had discussed with the Egyptian authorities the issue of the low-interest rate initiatives the CBE issued over the years and that the fund refused to be moderated by the CBE.

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

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