Fresh subsidized loans for hospitality players? The tourism and finance ministries have agreed to launch an initiative offering subsidized loans at a 12% interest rate to local and foreign hospitality players looking to set up more hotel rooms across the country, AlMal reports, citing unnamed sources.

The goal is to create more rooms to keep up with Egypt’s ambitious tourism goals: The government wants to attract 30 mn tourists per year by 2028. To that end, it wants to add 200k hotel rooms to accommodate the increase. Hotel capacity in Egypt stood at around 222.7k at the end of Q1 2024, according to the Tourism Ministry.

In perspective: The 12% interest rate charged in the initiative is nearly two and a half times smaller than the central bank's post-float 28.25% lending rate.

What’s next? The ministries are drawing out the final details of the initiative to be presented to the cabinet, the sources said.

It won’t be the first time the government offers tourism players subsidized loans: The Central Bank of Egypt in July suspended a similar EGP 50 bn tourism support program that used to offer tourism players soft loans to upgrade tourism infrastructure. At the time, the central bank said it would work with the ministries of finance and tourism to launch a new initiative.

ICYMI: The Madbouly cabinet approved a EGP 50 bn tourism initiative in December that will see the government offer financial incentives to encourage hospitality players to increase their hotel room capacity. The initiative included a payout of up to EGP 2 bn for hotel companies to build, set up, or acquire new hotel rooms on the provision that the companies exchange no less than 40% of their hard currency revenues through the banking system for a five-year period.

Other sectors too have access to subsidized loans: The new initiative follows the recently approved EGP 120bn subsidized loan program offering financing at an interest rate of 15% for manufacturers in freezones as well as agriculture and renewable energy companies.

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