Under leadership of President El Sisi, parliament has passed a number of key laws to enhance business climate.
Policymakers have embarked on a number of key monetary and fiscal mechanisms to maintain market stability over the past decade. The Central Bank of Egypt (CBE) has launched corridor-linked deposits to absorb excess liquidity at the local lenders and combat inflationary pressures.
A central bank simply launches weekly deposit auctions for short terms to contain market liquidity. These deposit auctions are an open market instrument to control liquidity levels on market. The objective is to bridge any possible liquidity gap in cash flows.
The corridor-linked deposits also meet the cash needs of the Ministry of Finance, in addition to treasury bills. Moreover, this mechanism invigorates banks to lure more savings at high yields. It boosts the appetite for savings in the Egyptian pound.
That explains why banks are eager to bid for corridor-linked deposits, which increase their earnings in the short term and well cover their cash flows.
New banking law
The parliament has introduced a new banking law to boost Egypt’s business climate. The new legislation has upgraded the nation’s banking sector as it gives the CBE the power to hold banks accountable for employing deposits in development projects, similar to other banks worldwide.
The CBE is seeking means to boost credit for the public and private sectors to lift the economic growth rate and increase investor confidence. A central bank’s key objectives are to keep the banking system solvent and maintain the credit and payment systems well-functioning.
Banks play a crucial role in the investment and economic growth of any country.
They are the backbone of the financial system, providing a range of services that facilitate economic activity, including lending, borrowing, and investing. Banks are essential for businesses to access capital to grow and expand, and for individuals to invest in their future. One of the most important roles that banks play is providing loans to businesses.
New investment law
The parliament has also passed a new investment law to lure local and foreign investors and economic growth. The new investment law is aimed at the eradication of red tape and bureaucracy in a bid to slash costs, risks and to deepen competitiveness.
In a bid to boost decentralisation, the new law proposes launching investment one-stop shops, where official delegates offer investors an all-in-one service, including licensing, registration and property allocation procedures.
An efficient implementation of the new law and boosting a new investment culture will be the key drivers for pushing the nation’s economic growth ahead. The new legislation will bear fruit only when words are turned into deeds.
Wider insurance coverage
In a bid to expand the nation’s insurance coverage, the parliament has enacted Egypt’s first unified insurance bill. The new law is aimed at increasing the sector’s contribution to gross domestic product (GDP).
The insurance industry is part of non-banking finance, which includes a range of instruments such as factoring, leasing and mortgage funding schemes.
The new law regulates insurance companies, whether life insurers or providers of property and casualty, health, and financial coverage, in order to perform important economic functions and to play a bigger role in the economy.