Cairo, Egypt, November 24,
IFC, a member of the World Bank Group, is helping the Egyptian government reform its insolvency laws, an effort designed to attract foreign investment and promote economic growth.
IFC will advise Egypt’s Ministry of Justice as it revises the country’s insolvency framework, which currently makes it difficult for struggling companies to re-organize or be liquidated. That uncertainty can have dampening effect on investment. The insolvency reforms will allow indebted firms time to recover and make it easier for unviable businesses to exit the marketplace.
“Our collaboration with IFC will assist in enhancing the capacity of judges and insolvency practitioners to efficiently handle insolvency disputes by expediting dispute resolution,” said Ahmed Mekki, Egypt’s Minister of Justice.
In Egypt, insolvency can be a challenging procedure. On average, it takes more than four years to resolve cases and creditors recover just 17 percent of their investment.
“Egypt is at a critical juncture,” said Luke Haggarty, Head of IFC Advisory Services in the Middle East and North Africa. “It needs to stimulate its economy through business growth and job creation. These reforms will help increase investor confidence in the country, thus attracting investments and creating jobs.”
The agreement between IFC and the Ministry of Justice was announced during a jointly-organized regional conference on insolvency. The two sides reached another accord to promote mediation, which allows companies to resolve quickly and amicably outside the court system.
The three-day-regional conference included judicial delegations from Lebanon, Tunisia, and Jordan. It provided participants with an opportunity to discuss the challenge of reforming the insolvency laws across the region, where on average is takes three years to resolve a case and the recovery rate is just 33 percent.
This initiative is funded by Switzerland’s State Secretariat for Economic Affairs (SECO) and is part of IFC’s Debt Resolution and Business Exit Program that aims to improve insolvency frameworks in the Middle East and North Africa, promoting a better-enabling business climate across the region.
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