(AFP Photo/ Khaled Desouki)
The Central Bank of Egypt (CBE) has launched an initiative to extend tourism debts to the banking sector to the end of June 2016.
Despite that, chairman of the Egyptian Tourism Federation (ETF) Elhamy El-Zayat believes the banking sector’s support of the tourism sector is not enough to hold it up over the next period.
El-Zayat said, in a statement on Monday, that it necessary to launch the tourism investment fund, which saves faltering projects. The fund, called the ‘Papyrus Fund’, was announced by the Ministry of Tourism and Cairo Financial Holding Company during the second half of 2013.
The CBE has launched an initiative to postpone bank entitlements from tourism companies until the end of June 2016, due to the conditions experienced by the business.
“The Ministry of Tourism will support the tourism investment fund with EGP 100m, EGP 25m of which were sent to Ayadi Company. Ayadi was established by the Ministry of Planning,” El-Zayat said. He added that the ministry will send EGP 75m upon the fund’s establishment.
El-Zayat expected the Ayadi Company to participate in the fund with EGP 100m, adding that it is not a big number. However, it shows the state’s seriousness in supporting the tourism activity, and its will in supporting the sector during the difficult circumstances it goes through over four years.
The Papyrus Fund’s capital amounts to $1bn, said El- Zayat, adding that there are investors and Arab sovereign funds want to participate in its capital. El-Zayat refused to disclose the investors’ names, saying that they are from the Gulf countries.
Egypt’s tourism income amounted to $7.3bn during the last year, compared to $5.9bn during 2013.
As for benefitting from the fund, El-Zayat differentiates between two types of companies, saying: “There are partially faltering companies, of which their problems can be solved through the involvement of the fund to replace the bank’s debt. After seven years the fund would exit it and sell it with the market price. On the other hand, there are some faltering companies that face severe problems of which the fund cannot help with.”
El-Zayat believes the second type requires involvement through purchasing the full faltered company by a specialised company for that purpose, which the federation currently studies.
The federation is still in negotiations with some companies over that issue, according to El-Zayat.
