The Central Bank of Egypt’s (CBE) board, headed by governor Tarek Amer, decided to extend the period of the initiative supporting the tourism sector until the end of February 2018.
The CBE said in its statement to banks operating in the local market that it will accept tourism investors’ requests to defer repaying their loans to banks for no longer than three years.
According to the statement signed by the CBE’s deputy governor Gamal Negm, the initiative’s regulations are guiding determinants for the banks, so banks should study each case individually in order to take appropriate decisions.
The CBE launched this initiative on 23 February 2016 and issued instructions to banks to defer all dues on existing loans provided to clients in this sector, given that they had been regularly repaying loans.
The bank’s instructions also stated that banks should capitalise facilities returns on loans and not apply extra interests on the deferred instalments for three years. This is besides keeping these customers on the list of regularly repaying customers.
The CBE also decided to extend the retail loans initiative for tourism sector workers for six months until the end of June 2017.
The CBE launched this initiative in 7 December 2015, allowing banks to postpone repayments on consumer and real estate loans obtained by the sector’s workers for six months, starting from its issuance date, without applying interest on late payments for this period.
The CBE explained that the extension of this initiative comes in the framework of the support given by the bank to the tourism sector after low occupancy rates during the past months, considering the sector as an important pillar of the national economy and an important supplier of foreign exchange.
The bank pointed out that several meetings were held with officials of the sector in order to discuss their needs in the coming period.
Amer met on 25 December with a number of investors in South Sinai tourism, and agreed with them on several issues, most notably establishing a fund for the development of all hotels, tourism facilities, and floating boats in the Nile River with a capital of EGP 5bn, and to finance these projects with an interest rate of 10%.
Amer said that these procedures support the tourism sector and are meant to improve the quality of tourism to foreign tourists in order to generate satisfactory returns for investors and the Egyptian economy.
He added that the bank agreed with investors during Monday’s meeting to establish companies to carry out the development of hotels and tourist facility projects, and providing management companies to ensure that they do not sell tourism products at low prices.
The bank emphasised the need to train and qualify workers in the tourism sector in order to improve the level of services in cafes and restaurants. The bank agreed to reduce the interest on some loans and to extend the repayment period, according to Amer.