(AFP PHOTO / KHALED DESOUKI)
The banking system is moving towards postponing the payment of the tourism sector’s dues to the end of this year, according to head of the Egyptian Federation of Chambers of Tourism, Elhamy El-Zayat.
He added that tourism activity is still suffering from financial problems that prevent it from paying dues to banks within the grace period launched by the Central Bank of Egypt (CBE) the end of December of last year.
One month is left in the six-month grace period launched by the CBE to postpone the payment of dues to the bank. The grace period began in January and ends at the end of June, according to El-Zayat.
“We requested a postponement to the end of this year,” added El-Zayat, asserting that there are no indicators that the bank will extend the grace period further. He attributed this to the fact that the banking system had already postponed the payment of dues several times over the past four years.
Total tourism income last year was estimated at $7.3bn, with a growth of $1.2bn compared to the year before, according to tourism ministry.
Tourism activity has suffered from losses that neared $10bn over the past four years, with 2010 being the standard to measure the tourism income in Egypt.
Tourism income in 2010 exceeded $12bn, and the peak of the decline was in 2013, where incomes reached $5.9bn.
According to an official in the National Bank of Egypt (NBE), his bank is considered one of the largest banks that deal with the tourism sector and works on pushing it toward growth through a number of incentives provided over the past period. He added that NBE still loans hotels despite the crises the sector is going through.
The official, who requested to remain anonymous, said that NBE worked on offering operating loans to hotels over the past two years ranging between EGP 1m to EGP 5m in each individual loan. He added that total loans by the bank in 2013 exceed EGP 200m for these kinds of loans.
“These operating loans enabled hotels to operate during difficult times with little financial liquidity, helping them to face operating costs, from workers’ wages to buying foodstuffs,” said the official.
He added that loans over the past two years exceed EGP 300m, and hotels located in South Sinai are considered amongst the ones benefiting the most from these kinds of operating loans.
The operating capacity in South Sinai is 62,000 rooms, while in the region of the Red Sea, it is 69,000 rooms, with both representing 65% of total hotel capacity in Egypt.
Despite the significant facilitations offered by banks over the past four years, some banks are not bound by NBE’s instructions of postponing debts payments for the tourism sector to the end of next June, according to vice president of the Floating Hotels Investors Association, Abdul Rahman Anwar.
Anwar added that some banks still marginalise “the process of not providing investors with new loans due to the non-payment of previous loans”, despite the current financial crisis the sector is going through, even though it is out of the hands of those working in the sector.
NBE is considered one of the most cooperative banks with the tourism sector throughout the past years, according to Anwar.
