Central Bank of Egypt ends Letter of Credit system for importing

MENA , Ahram Online , Thursday 29 Dec 2022

The Central Bank of Egypt (CBE) annonced in a statement on Thursday that it has ended the use of the system requiring importers to obtain letters of credit (LCs) for their purchases and returned to the cash-against-documents system for importing goods.

Port Said
File Photo: General view of Port Said port. Al-Ahram


In late October, the CBE announced that it would begin a process of phasing out letters of credit system for import finance by the end of December.

Last February, the CBE instituted the LCs system obliging all importers to use letters of credit to finance their imports instead of the collection system of cash-against-documents that had been in force for many years.

The February decision exempted foreign companies and subsidiaries from the rules.

However, the LCs system was met with objections from importers who said it would worsen existing supply chain problems, increase production costs and lead to higher inflation.

As a result, President Abdel-Fattah El-Sisi issued a decision in May exempting importers of production supplies and raw materials from the LCs requirement.

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