The Central Bank of Egypt (CBE) has decided that from March, Egyptian importers can only import goods using letters of credit and has instructed banks to stop processing exporters’ collection documents, the Enterprise newspaper reported.
After the decision was announced, Egyptian chamber of Commerce federation, industry federation and importers complained one after another, arguing that the move would lead to supply problems, raise production costs and local prices, and have a serious impact on small and medium-sized enterprises that have difficulty in obtaining letters of credit. They called on the government to carefully consider and withdraw the decision. But the central bank governor said the decision would not be reversed and urged businesses to abide by the new rules and “not waste time on disputes that have nothing to do with the stability and good performance of Egypt’s foreign trade”.
Currently, the cost of a three-month basic import letter of credit with the Egyptian Commercial International Bank (CIB) is 1.75%, while the import documentary collection system fee is 0.3-1.75%. Branches and subsidiaries of foreign companies are not affected by the new rules, and banks can accept invoices for goods that have been shipped before the decision is made.