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Thursday, 12 January 2023

Industry and agriculture to get fresh subsidized loans at a higher 11% rate

Gov’t plans EGP 150 bn subsidized loan program for industry and agriculture: The Madbouly government is set to offer EGP 150 bn worth of loans at a subsidized 11% interest rate to industry and agriculture players, according to a cabinet statement. The program is set to launch next week, immediately after cabinet gives its final sign-off during its weekly meeting, Prime Minister Moustafa Madbouly is quoted as saying.

REFRESHER- The Central Bank of Egypt (CBE) in November scrapped its 8% subsidized loans for the industry, agriculture, and construction sectors. The CBE committed to end support for its subsidized loans and pass the responsibility on to government ministries as part of the IMF’s conditions for our USD 3 bn bailout package. While programs including subsidized mortgages and tourism industry loans found new homes at the relevant ministries, we hadn’t heard until now whether the industry and agriculture loans would be rebooted.

Higher rates but a bigger overall pot: The government is setting aside 50% more for the loans than the CBE made available in its previous EGP 100 bn program. Some EGP 140 bn will go to financing companies’ working capital, with EGP 10 bn set aside for capital goods purchases.

The news should make manufacturers happy: The Egyptian Businessmen’s Association (EBA) expressed its surprise and dismay when the 8% loans were scrapped, calling on the Finance Ministry to help keep the program going.

What about construction? The statement made no mention of construction companies, suggesting the sector is yet to see any replacement for the subsidized loans scrapped by the CBE.

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