Banks settle 15 cases of currency differences for companies in debt

CAIRO - 10 April, 2017: Banks have settled only 15 cases out of 570 companies that cannot repay their debts as a result of exchange rate fluctuations after the pound flotation in November, Head of the 10th of Ramadan City Investors Association, Samir Aref revealed Saturday.

Governor of the Central Bank of Egypt (CBE), Tarek Amer, agreed in February to settle debts of about 570 companies harmed with the flotation of the local currency.

"There are still many complaints from the debtor companies. Unfortunately, only 15 investors have been able to solve their problems with the banks," Aref added during a board meeting of the Egyptian Federation of Investors Association (EFIA).

The crisis started when the banks provided U.S. dollars to companies through letters of credit issued to cover imports, when the exchange rate stood at 8.88 EGP per $1 before the pound flotation, but after flotation the U.S. dollar was equivalent to about 19 EGP, triggering banks to ask the debtor companies to repay their debts at the new dollar rate.
Serious governmental promises to issue Investment Act in April

The CBE governor met a group of the EFIA’s representatives in February, and promised them the debts scheduling will occur in two phases he first phase is aimed to solve the problems of companies whose debts are less than $5 million. Around 570 companies out of a total of 670 companies should be cleared in this phase.

"The initial phase of the debt is worth $600 million, which will be provided by the CBE to banks in local currency under the condition that indebted companies will repay them to banks within two years at an interest rate of 12 percent," Aref added.

He said the second phase will include companies which have debts exceeding $5 million, adding there are about 100 companies with total debts of $1.4 billion.

On the other hand, the meeting discussed the outcome of the EFIA's meeting with the Ministry of Investment and International Cooperation to review the investment law.

The main topic of the meeting was dividing the act into two laws, one of them is the investment incentives law and the other is the investment procedures law.

"What is important for us as investors is the investment guarantee and incentives, and hopefully we wish getting it soon," deputy EFIA's Mohram Helal told Egypt Today on the sidelines of the conference.

"We got serious governmental promises to issue the new investment law within this month, and issuing its executive regulatory within 90 days," EFIA's Board Member Alaa Al-Sakty told Egypt Today.