The finance ministry will be running an audit on the initiatives to plan a strategy on how to move forward without the CBE’s support, as well as assigning the body that will finance each initiative
The Central Bank of Egypt (CBE) will stop managing low-interest rate initiatives and provide funding for subsidized loans, handing the responsibility to three other ministries.
In a decree issued by Prime Minister Mostafa Madbouly yesterday, the PM explained that the CBE would be passing these to the housing, finance and tourism ministries.
The Ministry of Finance will handle the management and follow-up on all existing initiatives that have a low return on market prices instead of the CBE, the PM continued.
The finance ministry will be running an audit on the initiatives to plan a strategy on how to move forward without the CBE’s support, as well as assigning the body that will finance each initiative.
At the Egypt Economic Summit last month, acting-Governor of the CBE Hassan Abdalla stated that “the main task of the Monetary Policy Committee of the Central Bank is to confront and control inflation, not initiatives.”
Urban inflation reached a four-year high explained CAPMAS in its latest report.
The Ministry of Housing and Urban Development will be responsible for the real-estate financing initiative with decreasing 8% interest rates that benefit the middle-income class, as well as the 3% decreasing interest rate initiative dedicated to the low and middle-income classes.
The ministry will also bear the cost of compensating banks for the difference in the rate of return while reducing the maximum limit for the initiative to EGP 15 billion instead of EGP 50 billion. The value of compensation for that initiative is calculated on the basis of the amount used under the initiative X the credit and discount rate + 2% – 8% reducing interest.