Your Highness, Prime Minister, please read these lines
Your Highness, the Prime Minister,
Please read these lines...
In major crises, particularly regional ones, countries launch initiatives to strengthen their economic standing, with the private sector— the lifeblood of any nation—being the primary target.
In this vein, the Egyptian Ministry of Industry, in collaboration with the country’s Central Bank, launched an initiative to rehabilitate closed or threatened factories, as well as those in distress. Named the “Distressed Factories Restructuring Fund,” it is capitalized at one billion Egyptian pounds, with contributions from both local and foreign banks.
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There is no doubt that this fund will kick-start production in numerous industrial facilities that have suffered or are currently suffering from the repercussions of the crisis gripping the region due to the ongoing war. Meanwhile, many service-sector facilities worldwide, and in the Gulf specifically, continue to bear the brunt of the coronavirus pandemic, as well as previous wars and crises in the region.
Nations are not isolated islands; they are affected by their surroundings. Therefore, they work to mitigate anticipated risks rather than continuing business as usual.
It is true that companies restructure themselves during critical times, but such measures often reduce output, thereby impacting the overall local economy. For this reason, governments assist these companies and factories through various steps, such as instructing central banks to extend loan repayment periods, suspend interest accrual, provide loans to boost economic activity, and restructure their debts.
Furthermore, governments halt fees and charges for these companies and factories because these facilities employ national and non-local labor forces and need to continue providing their services. Their collapse or distress resembles a “domino effect”; if one stone falls, others follow until the end.
When a country faces a crisis, it eases its measures; how much more so when it is in a war and a major regional crisis, as is the case with the current conflict in the region?
Subsidizing distressed companies becomes a necessity under these sensitive conditions, as it strengthens the economic cycle by supporting businesses and factories, helping to navigate the crisis at the lowest possible cost.
If a company—any company—is given the opportunity, it not only resumes its operations but also strengthens the local economy and helps the state consolidate its standing among nations. Thus, the Egyptian initiative comes within this context to prevent any loopholes that could weaken the state’s economic strength.
The initiative aims to support six thousand factories across six priority sectors: food, textiles, chemicals, pharmaceuticals, engineering, and construction materials, thereby encompassing the economy as a whole.
The Egyptian step aligns with measures taken by some Gulf states to mitigate the current crisis, whether through injecting funds into the local economy, utilizing massive reserves and sovereign wealth fund assets to delay severe austerity, and absorbing temporary shocks.
Today, there are many negative repercussions on the economies of the Gulf as a whole, including Kuwait, which needs to emulate such measures to enhance economic resilience, build capacity to face future repercussions, encourage direct investments between sovereign wealth funds and companies/factories, and even issue a government decision to suspend fees for these facilities until the end of the crisis, providing them with financial assistance to overcome this phase.
