Arab Today, arab today cbe decision to support smes should turn egypt into productive economy
Last Updated : GMT 02:18:28
Arab Today, arab today
Arab Today, arab today

CBE decision to support SMEs should turn Egypt into productive economy

Arab Today, arab today

Arab Today, arab today CBE decision to support SMEs should turn Egypt into productive economy

Central bank Egypt
Cairo - MENA

The Industrial Development & Workers Bank of Egypt has praised a recent decision made by the Central Bank of Egypt (CBE) encouraging banks to offer loans to small and medium-sized enterprises (SMEs), seeing in it a step toward turning Egypt from a consumer economy to a productive economy.

The CBE decision is meant to encourage funding of productive projects and reducing random consumer borrowing, said Haitham Abdel Fattah, director general of the budget sector at the Industrial Development & Workers Bank of Egypt, in statements to MENA Tuesday.

It is a daring decision that is based on a clear vision by the political and banking leadership, Abdel Fattah said.

Egypt has been missing a lot of those decisions and long-term economic visions, he noted.

The CBE decision will help reduce credit investments given to VIP clients from 20 to 15 percent, Abdel Fattah explained. It will also reduce investments in monetary funds from 5 to 2.5 percent, he added.

All such measures will help secure huge liquidity for banks to reuse it in funding productive SMEs, Abdel Fattah noted.

Implementing the CBE decision will have a positive impact on the macroeconomic and growth rates, he believes.

Abdel Fattah wondered about statements by some people about the difficulty of implementing the CBE decision on the ground. According to him, banks can easily secure 200 billion pounds in four years to fund SMEs.

He ruled out the possibility that heavy losses will be inflicted on banks due to the high risk of funding SMEs, assuring banks do not act randomly. There are specialized administrations that take care of such files, Abdel Fattah said.

He put the total value of loans to the private sector at around 700 billion pounds, adding that the risk factor is reasonable.

Loans to SMEs will be granted in line with certain rules and regulations, Abdel Fattah said, noting that banks will be posted on all specifics about the projects and their studies.

Banks will also provide consultancy to owners of the projects until loans are repaid, he added.

The CBE decision should change the economic map of Egypt, Abdel Fattah expected. Countries could take long decades to implement such vision, he said, noting that the CBE was able to outline a plan that does not exceed four years.

This plan is applicable on the ground, he stressed.

 

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