No interest rate hikes on soft loans to industry, agriculture players

Interest rate hikes won’t affect the subsidized loan program, gov’t affirms: TheFinance Ministry will continue to offer loans at a subsidized rate of 11% to industry and agriculture players despite the recent 2% rise in interest rates, the ministry said in a statement. The Central Bank of Egypt (CBE) last month delivered a jumbo 200 bps rate hike in a bid to rein in soaring inflation.

The price tag?The treasury will bear more than EGP 13 bn annually to cover the difference between market rates and the subsidized rate, the statement reads. The program, which will see FinMin extend some EGP 150 bnworth of loans, had initially been expected to cost the state purse around EGP 10 bn.

It’s all in the name of exports: The program seeks to help industry and agriculture players increase exports — in addition to covering domestic needs and limiting imports — by providing them with the liquidity to up production, the statement says. The government aims to increase exports to USD 100 bn a year by the middle of the decade.

REFRESHER- The government introduced the loan program last year, shortly after the CBE announced it would stop handing out soft loans and transfer the responsibility for them to the state as part of the loan agreement with the IMF.