The Central Bank of Egypt will provide the Credit Guarantee Company (CGC) with EGP 7bn worth guarantee for corporate financing. In exchange, CGC will issue guarantees to banks offering funding for major corporates to cover part of the associated risks.
In a statement issued on Sunday, the CBE said this initiative aims to benefit clients of the industrial, agricultural, and contracting private sectors initiative.
It also identified the target groups in these three sectors, whose annual work volume or revenues amount to EGP 200m or more.
The initiative will extend over a period of 10 years, or when the full value of the pledge has been consumed, whichever comes first.
Banks will be unable to use the facilities granted under this pledge in paying existing facilities, to ensure that the facility is used for the purpose for which it was granted.
The CBE also stressed that the pledge will be used to ensure facilities for new customers or increase existing facilities. This would come at the same time as providing a monthly report to the credit risk insurance company with the data of companies subject to the initiative, in accordance with the initiative’s requirements.
On 13 December 2017, the CBE provided the CCG with EGP 2bn guarantee for micro-, small- and medium-sized enterprises (SME) financing. This was put in place in exchange for the company issuing guarantees to banks to cover part of the risks associated with financing.
On 12 December 2019, the CBE launched an initiative providing EGP 100bn through banks at an annual decreasing rate of 8%. The initiative was put in place to finance regularly-paying companies, with annual revenues of EGP 50m or more, operating in the industrial, agricultural, and private sectors.
According to the CBE, the latest initiative was launched to counter the significant negative side-effects of the novel coronavirus (COVID-19), and its impact on the activity of many companies.
These initiatives are also part of the CBE’s efforts to support Egypt’s economy.
The bank explained that the CGC has expanded its scope of work to include guaranteeing large companies alongside with SMEs.