Egypt approves final terms for new tourism sector support initiative

Updated 7/25/2024 10:58:00 AM

Arab Finance: The Egyptian cabinet has approved the final terms and implementation mechanisms for a new initiative to support the tourism sector, funded by the Ministry of Finance, as per a statement.

This initiative aims to boost investments in building hotel rooms as part of broader support for productive sectors.

During the weekly cabinet meeting, key elements of the new tourism support initiative were reviewed.

The initiative, agreed upon by the Ministries of Finance, Tourism and Antiquities, and Investment and Foreign Trade, will determine the available credit for each company based on its size and banking regulations.

The maximum financing for a single client is set at EGP 1 billion, or EGP 2 billion for a client and related parties, through a maximum of two banks under the initiative.

The initiative allocates up to EGP 50 billion to companies in the tourism sector, contingent on prior approval from the Ministry of Tourism and Antiquities.

The funds are intended for building and operating new hotel rooms, expanding existing projects, or converting closed buildings into hotels.

This includes completing any necessary construction, fittings, or finishes for these buildings, provided they have not previously been licensed as hotels.

The initiative prioritizes financing hotel rooms in Luxor, Aswan, Greater Cairo, the Red Sea, South Sinai, Sharm El-Sheikh, Taba, Nuweiba, and Dahab.

Applications for the initiative will be accepted within one month of its launch and will be open for 12 months.

The withdrawal period will last up to 16 months, with a maximum deadline of June 30, 2026.

Beneficiaries must obtain a temporary or permanent hotel operating license within six months of the withdrawal period's end to ensure the rapid deployment of hotel rooms.

Benefiting companies will be subject to a diminishing interest rate of 12%, with the Ministry of Finance covering the difference between the Central Bank of Egypt’s (CBE) credit and discount rate +1% and the 12% decreasing rate.

Companies must also bear the difference in the credit and discount rate if it increases beyond the current rate at the initiative's launch.

The initiative outlines conditions for excluding clients and adjusting interest rates.

Clients are prohibited from using the granted credit to settle other banking debts.

This initiative supports the Ministry of Tourism and Antiquities' strategy to attract 30 million tourists, requiring an additional 240,000 to 250,000 hotel keys to accommodate the increased number of tourists.

The investment in new hotel rooms is expected to generate significant economic benefits, including $1-2 billion in annual revenue per 15,000 hotel rooms, and create approximately 45,000 new jobs.