Regulatory Alerts2020-06-27
A circular dated June 25, 2020 regarding the initiative to guarantee facilities for major companies operating in the industrial, agricultural and contracting sectors through the Credit Risk Guarantee Company.
The Central Bank of Egypt has launched a $7bn guarantee scheme to support small and medium-sized businesses. This initiative will be covered by Egypt's state-owned Credit Guarantee Company, which will issue guarantees for banks lending to small and medium enterprises (SMEs). The Central Bank's initiative is part of its commitment to support private sector companies as they face challenges related to the pandemic. It aims to boost confidence in lending to SMEs by providing a safety net for banks lending to them, helping them maintain their liquidity levels and continue operating amid market uncertainties caused by the crisis. According to the Central Bank's executive director, Tarek Amer, the move is also designed to address concerns from foreign investors who may be reluctant to invest in Egyptian SMEs due to potential credit risk. The initiative will cover a portion of the bank loans provided to SMEs and help maintain the financial stability of Egypt's economy by ensuring that viable businesses continue to receive funding, despite the economic downturn caused by the pandemic.