The Egyptian cabinet has approved a reviewed draft of the North African country’s bankruptcy laws. The revised ruling has replaced prison sentences as punishment for bankruptcy with monetary fines in a move that marks a major review of the evolving bankruptcy laws in Egypt.
As much as it lessens the frequency of resorting to court to resolve cases of bankruptcy, the new law specifies stringent punishment for false claims of bankruptcy by business owners. Speaking to the media on Wednesday, Egypt’s Minister of Investment, Dalia Khorsed explained that new law is part of the latest investment legislations adopted by the government to provide the maximum possible amount of guarantees for investors and businesspersons.
Business in Egypt is increasingly becoming hard for businesspersons after the president Al-Sisi led government agreed to float the Egyptian pound and increase fuel prices. The floatation has led to further increase in prices of commodities as the effect of the sharp fall in the value of Egyptian pound and the corresponding rise in the value of the US dollar bites hard on the masses.
Egypt, a largely importing economy, decided to float its currency, taking away the power of price determination from the government, after the US dollar became scarce late 2016. It was argued by economists that floating the Egyptian currency would help build its foreign reserve as well as invite foreign investors. The new bankruptcy law, as explained by Dalia Khorsed, would complement the new investment law with the aim of opening an enabling environment for local and foreign investors.
The new bankruptcy law is introduced as a way of saving as many local business from packing up in the wake of inflation in the prices of goods and commodities. The Egyptian dollar which stood at EGP 8.88 in October has risen to EGP 19 per dollar after the floatation.
In a move to stabilise the economy and encourage local investors, the government at its weekly cabinet on Wednesday agreed to increase its buying prices for local commodities like wheat and sugarcane.