Tarek Amer, the Governor of Egypt Central Bank revealed that he intends to provide 100 billion Egyptian pounds ($6.36 billion) in loan guarantees to banks to encourage corporate lending during the "Corona" virus crisis.
He pointed out that the decision comes at a time when business risks are growing, especially with regard to companies and finance, noting that loans are at an interest rate of 8%, which reduces the central lending rate of the central bank of 10.25%.
The Corona virus affected the Egyptian economy, especially with the almost complete halt of tourism, as the sector constitutes 5% of the gross domestic product, as well as the closure of restaurants and cafes since last March.
Amer explained that the Central Bank’s decision to issue guarantees to banks comes in light of the high risks of business in the markets in light of the current circumstances, especially with regard to companies and finance, and also aims to help initiatives to pump loans in the markets to companies to achieve their economic goals. He also considered that the decision will contribute to motivating banks to pump loans to economic private sector companies in order to preserve their entities and their financial solvency and employment.
Amer pointed out that the issuance of these guarantees will be through the credit risk guarantee company in which he contributes and is headed by the central bank, in order to cover the banks in these risks. He revealed that the central bank will issue guarantees for the credit risk guarantee company that would enable it to guarantee banks operating in Egypt to cover the loans of the Industry, Agriculture and Contracting sector in a full amount of 100 billion pounds, that the company issue guarantees to banks amounting to 80% of the amount of any loan employed by banks, while the banks would be able to bear only 20% of these risks.
Source (Al-Sharq Al-Awsat Newspaper, Edited)
