PRIVATE INVESTMENT ENCOURAGEMENT FUND

THE PROJECT WILL BE IMPLEMENTED BY THE MINISTRY OF ECONOMY (MOE). A PRIVATE INVESTMENT ENCOURAGEMENT FUND (PIEF) WILL BE ESTABLISHED WITHIN THE MOE TO CO-FINANCE, ALONG WITH PARTICIPATING BANKS AND PRIVATE SECTOR COMPANIES, FOREIGN EXCHANGE COSTS OF GOODS AND SERVICES IMPORTED FROM THE U.S. FOR PRIVATE SECTOR SUBPROJECTS. THESE SUBPROJECTS MUST BE FROM PRIVATE SECTOR AND MUST BE WITHIN A TOTAL COST OF $1-50 MILLION AND IN SPECIFIED AREAS OF MANUFACTURING, HEALTH, EDUCATION, OR TRANSPORTATION. PART OF PIEF MONIES WILL BE RESERVED FOR SPECIAL ENVIRONMENTAL AND EMPLOYMENT-CREATING ENTERPRISES. A REPAYMENT FUND WITHIN THE MOE IS ENVISAGED. CONSTRAINTS ON EGYPT"S LONG-TERM FINANCIAL MARKETS AND THE INSTITUTIONAL STATUS OF THE COUNTRY"S LONG-TERM CREDIT INSTITUTIONS WILL BE EXAMINED. CONSULTING SERVICES IN SUBPROJECT APPRAISAL AND IMPLEMENTATION WILL BE PROVIDED TO THE MOE AND PARTICIPATING BANKS,RESPECTIVELY. IN ADDITION, A TRAINING COURSE IN SUBPROJECT APPRAISAL AND IMPLEMENTATION WILL BE OFFERED TO BANK STAFFS AND THE NEED FOR ADDITIONAL COURSES DETERMINED. Amendment of 6/85 reobligates $22.2 million which was deobligated in 1983 following formal suspension of the project in 4/82. The original project design and implementation plan remain intact, but PIEF"s organizational structure has been modified, management and administrative responsibilities are being transferred to participating banks, and lending criteria have been revised. A specific aim of the reinstated project is to provide a $5 million subloan to General Motors Egypt. The project is extended through FY89. (PD-AAS-018) Amendment of 6/5/89 extends PACD 2 years to 9/91 and makes certain modifications which will enable the PIEF to disburse $15.2 million which remains uncommitted from the original $33 million authorization. Specifically, the amendment: (1) changes the implementing agency to the Ministry of International Cooperation, which, unlike its predecessor, has agreed to delegate authority for loan approval to participating banks; and (2) liberalizes loan criteria and operating procedures (e.g., changes in credit limits, loan periods, downpayments, and grace periods). Short-term credit will now be available from the PIEF, and virtually any private enterprises (including Egyptian representativies of U.S. manufacturers, who are the only source of imports of smaller enterprises) will be eligible for loans. (PD-ABA-004)