File Photo: The Central Bank of Egypt. Al-Ahram
The five-year initiative, proposed by Prime Minister Mostafa Madbouly, will be applied with a decreasing interest rate of 11 percent, as per the regulations set by the Ministry of Finance.
The initiative supports large and medium-sized enterprises as well as the large, medium, and small-sized businesses operating under their umbrella, according to the CBE.
In addition, it covers free zone factories and agricultural cooperatives whose articles of association allow them to apply for loans.
According to the circular the CBE sent to banks, the largest share of the value of the initiative (EGP 140 billion) will be directed to finance capital money, the rest will go to financing capital goods purchases.
The CBE also set the maximum loan amount for individuals at EGP 75 million.
Multiple-party clients will not be allowed to receive more than EGP 112.5 million under the initiative.
The amount of credit available to each company will be set in accordance with the volume of its business and the banking rules, provided that the maximum credit limit allowed for each company does not surpass EGP 75 million in total, according to the CBE circular.
It also stipulated that each company has transactions with maximum two banks from those participating in the initiative, under which it is prohibited for any client to use any of the credit available under this initiative to pay any other debts within the initiative maturity.
The value of the initiative will be reduced by 20 percent per year, according to the CBE.
In the event that the financing maturity for the beneficiary would exceed the five-year maturity of the initiative, the beneficiary will bear the total cost of the financing.
Egypt has been taking several steps to support citizens against the impacts of the global economic challenges and mitigate the repercussions of the adoption of the country’s new $3 billion loan loan with the International Monetary Fund.
The first review of this deal is scheduled for 15 March, which paves the way for Egypt to receive the second tranche of the loan valued at $347 million.
Under the IMF-backed deal the CBE committed to refraining from managing and financing low-interest rates initiatives. Instead, the CBE handed the management of such initiatives to the government to reflect their proceeds into the state budget.
The first steps towards that the CBE took in November when it handed off the responsibility of managing five low-interest-rate initiatives to the Ministry of Finance