The government has given the green light to a new initiative aimed at bolstering the tourism sector. Funded by the Ministry of Finance, this strategic move seeks to accelerate investment in hotel room construction as part of broader efforts to support productive sectors. During the recent meeting, key aspects of the initiative were thoroughly reviewed. The Ministries of Finance, Tourism and Antiquities, and Investment and International Cooperation have all agreed on the terms and conditions. Notably, the available credit for each company will be determined based on business size and banking regulations. Under this initiative, the maximum funding per client is set at EGP 1bn, or EGP 2bn for a client and its related parties, with a maximum of two banks involved. The allocated fund of up to EGP 50bn will be directed toward companies in the tourism sector, subject to prior approval from the Ministry of Tourism and Antiquities. This funding is specifically designated for building and operating new hotel rooms, including expansions of existing projects or converting closed buildings into hotel facilities. Eligible projects may cover construction, fittings, and finishes, provided the building has not previously received a hotel operation license. Priority for funding will be given to hotel rooms in key areas such as Luxor, Aswan, Greater Cairo, the Red Sea, South Sinai, Sharm El-Sheikh, Taba, Nuweiba, and Dahab. Applications for the initiative will be open for one month from the launch date and will remain accessible for 12 months. The maximum drawdown period is 16 months from the first withdrawal date, with the final withdrawal deadline set for 30 June 2026. Companies will have a 6-month grace period after the drawdown period to obtain either a final or temporary operation licence, ensuring swift deployment and service commencement for the new hotel rooms. Benefiting companies will enjoy a reduced interest rate of 12% on a declining basis. The Ministry of Finance will cover the interest rate differential, calculated as the Central Bank's credit and discount rate plus 1% minus 12% on a declining basis. Note that this compensation excludes any other fees or commissions. Companies participating in the initiative will bear the cost of any increase in the credit and discount rate beyond the current rate at the time of the initiative's launch. Specific conditions for excluding clients from the initiative and adjusting interest rates have also been outlined. Clients are prohibited from using the credit granted under this initiative to repay other outstanding debts in the banking sector. This initiative aligns with the Ministry of Tourism and Antiquities' strategy to attract 30 million tourists. Achieving this target necessitates adding 240,000 to 250,000 new hotel rooms to the current capacity. Therefore, collaboration among relevant state entities is crucial to encourage investment in new hotel room construction. The meeting emphasized that investing in new hotel rooms significantly supports the national economy. Approximately 15,000 new hotel rooms can generate annual revenues of $1bn to $2bn, along with EGP 1.5bn to 2bn in value-added tax. These figures exclude other taxes such as commercial, industrial profits, and payroll taxes. Furthermore, operating these rooms is expected to create around 45,000 new direct and indirect job opportunities. Providing incentives to encourage the construction of new hotel rooms will positively impact the national economy and citizens' lives by reducing unemployment rates through increased private-sector investment. According to the national tourism strategy and the main tourism products focused on by the Ministry of Tourism and Antiquities, such as cultural tourism, the initiative also aims to develop new tourism products, leveraging Egypt's rich tourist attractions. This includes ongoing and upcoming additions to Egypt's tourism assets through efforts to develop numerous archaeological sites in historic Cairo and offer investment opportunities there. Additionally, the anticipated opening of the Grand Egyptian Museum is expected to enhance city tourism in Greater Cairo as a new product.
