Egypt's Central Bank Discontinues The Letter Of Credit System For Importing

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Monday - 2 January 2023 - 1:40 PM


 the Central Bank of Egypt (CBE) declared that it had stopped using the system that required importers to obtain letters of credit (LCs) for their purchases and had instead gone back to the cash-against-documents method of importing products.



The CBE announced in late October that the letters of credit import financing mechanism would be phased down by the end of December.



All importers are now required to use letters of credit in place of the long-standing cash-against-documents collection mechanism since the CBE launched the LCs system last February.



International firms and their subsidiaries were excluded from the requirements under the February ruling.



However, importers argued that the LCs system would exacerbate present supply chain concerns, increase production costs, and increase inflation.



The president, Abdel-Fattah El-Sisi, subsequently issued a directive in May exempting importers of raw materials and production supplies from the LCs requirement.