CAIRO - Egyptian banks working in the local market have agreed to postpone again the repayments of loans by investors in South Sinai for six months, starting from December. The decision has been taken by banking sector officials to support tourist companies, which have been harmed in the wake of the January 25 revolution. Tareq Amer, the head of the Banksí Union, in collaboration with banking field representatives, has agreed to subsidy the tourism sector by pumping funds into projects that are defaulting though lack of finance, especially those nearing completion. In a related context, the Banks Union head has revealed that the banking sector is able to support other sectors adversely affected by the current political conditions and security vacuum. A liquidity of nearly LE1 trillion has been available since 2003 that can revive the activities of most sectors, Amr mentioned in a meeting held recently in Cairo attended by the Banks Union and bank representatives. Amr pointed out that the real current problem, which might lead to the bankruptcy of many tourist companies, is the lack of liquidity to cope with their financial commitments, accompanied by a decline in the growth rate. The average will not rise by more than one per cent though it reached seven per cent three years ago. The Banks Union head stressed the importance of rationalising consumption and the necessity of adopting a policy of austerity, given that the import and consumption rates are still high. Accordingly, the State is still importing cell phones at an annual estimate of $70 million (around LE 470 million) and vehicle accessories at LE 2.3 billion. The Governor of South Sinai Khaled Fouda has stressed the need to enhance investment in order to pass through the current crisis and offer assistance to the tourist sector, which has contributed to one third of the national income. He noted that there is some improvement in hotel occupancy in the South Sinai Governorate reaching 65 per cent in certain areas. However, Hisham Ali, the head of the South Sinai Investors Association told Al-Shorouq Arabic daily newspaper that the average hotel occupancy rate does not exceed 20 per cent. He is expecting the current tourism difficulties to continue until next June. It was also revealed that Russian tourism would essentially stop from November 20 because Russia will cease charter flights to Egypt. This has critical implications for the Red Sea resort of Sharm el-Sheikh, given the importance of Russia as a tourist market. For his part, Fathi el-Sebea, the head of the Housing and Development Bank, stated that there is no need for concern about financing the tourism sector because its assets cover the loans but investors should still repay the bank loans on time if practicable. Official reports issued for the first nine months of the current year, have recorded 6.8 million tourists against 10.5 million tourists in the same period last year. A Ministry of Tourism report indicates that the number of tourists in the third quarter of the current year (July to September) reached to 2.7 million tourists. Ahmed Balbaí, a member at the South Sinai Investors Association, has noted that some tourist agencies have been forced to cease their activities and others have reduced their operational capacity due to the present challenging bad conditions. He has called for the private sector to set up private aviation companies, as there are markets without air flights to Egypt, He pointed out that there are people in these markets who want to visit Egypt.
