The Central Bank of Egypt (CBE) has amended two tourism initiatives to finance the replacement and renewal of hotels and transport fleets, as well as the payment of salaries and maintenance.
In a letter to banks, published on its website on Wednesday, the CBE said that the move comes in light of the continuous review of these initiatives and the novel coronavirus (COVID-19) pandemic.
The initiatives aim to support Egypt’s tourism sector and its workers. As part of this, hotels and tourism companies were required to carry out maintenance on all their facilities and transport fleets, in preparation for receiving the expected tourist groups.
The CBE decided to amend the initiative to finance the replacement and renewal of hotels, floating hotels, and tourist transport fleets, issued on 8 January 2020 at a decreasing rate of 8%.
Banks would finance 90% of the total cost of replacement and renewal with a new maximum limit, instead of 75%. Clients bear the remaining amount. The client’s share should be proportionate to the bank’s share, based on the bank’s study of the client’s future cash flows.
The amendments also included the credit risk guarantee company guaranteeing 70% of the credit risk instead of 60%, before asking the company to disburse the guarantee. This would occur provided that banks bear 30% instead of 40%.
The CBE has also made some other modifications, making the Ministry of Finance’s guarantee worth EGP 3bn with a declining yield of 5%.
Moreover, the validity of the initiative has been extended for a further six months to the end of December 2021, instead of June 2021. It can also end in the cause of using up the allocated amount of EGP 3bn, whichever is earlier.
The grace period is extended to the end of June 2022, provided that the first instalment begins in July 2022 for two years.
The CBE said that customers who have previously benefited from the initiative since its issuance can benefit again.
This is provided that the maximum total funding within the framework of the initiative does not exceed EGP 30m for the client alone, and EGP 40m for the client and related parties, regardless of the number of months funded.
It added that Egyptian joint stock companies working in the tourism field can also benefit from the initiative, regardless of the percentage of the foreign partner.
The CBE said that with regard to the initiative to pay salaries and wages of tourism sector workers, in addition to financing basic maintenance and operating expenses, it is not a condition for clients to have made profits in recent years. It affirmed that the rest of the terms of the initiatives will remain in effect.