Egypt Doubles Private Sector Funding As Coronavirus Crisis Continues To Bite

Egypt has doubled down on support for the country's private sector, making EGP200 billion ($12.6 billion) of funding available as the central bank seeks to boost the economy.

The move is in keeping with the central bank’s policy to bolster the economy, Mohamed Abu Basha, head of macro research at EFG Hermes, told Arabian Business.

“The CBE wants to deepen access to finance and it is also a way to avail cheap funding for the important sectors of the economy,” he said.

He added that there are no figures on how much of this funding is aimed at capital expansion which will affect the overall assessment of the initiative.

Central Bank Governor Tarek Amer said in televised comments that the bank’s initiative in December offering EGP100 billion at 8 percent interest rate was initially offered to the industrial sector.

In March, it was expanded to also include the real estate development and the agricultural sectors

The amount has now been doubled due to its success in helping more than 4,500 companies during an economic crisis driven by the impact of the coronavirus pandemic.

The private sector is also lagging behind due to red-tape. The World Bank has urged Egypt to address constraints in a bid to generate “a strong, private sector-led economic transformation".

The measures should also “focus on measures such as lifting non-tariff trade barriers, fostering a level-playing field between the public and private economic actors, and facilitating access to key inputs such as land and skilled labour”, The World Bank added in a report in May.

The move comes as Egypt's external debt reached $111 billion in 2020, up from $48 billion in 2015.

Amer said the suspension of the collection of loan installments for six months starting March and ending next week due to the coronavirus pandemic amounted to EGP2 trillion and no decision has yet been made as to whether it will extend the suspension period, he added.

He said Egypt has paid $35 billion to cover commitments and essential goods for the market during the Covid-19 crisis.