The governor of the Central Bank of Egypt announced the obligation for importers to use documentary letters of credit as a means of payment. The new measure has sparked complaints from business groups and traders as it could inflate their costs, in addition to causing supply chain problems, damaging competitiveness and delaying shipments.
In response to the complaints, bank leaders have assured that the opening of credits will not take more than two weeks and, in addition, will facilitate the import of manufacturing materials and basic products. They pointed out that the banking sector will grant more loans to importers for the opening of documentary credits with the aim of boosting the Egyptian economy and activating production.
According to reports Al-Mal NewsAshraf El-Qadi, Chairman of the Board of Directors of United Bank, stated that the costs of opening documentary credits are the same as the costs paid by the importer in other means of payment and that there will be no additional charges.
The decision of the Central Bank is a regulatory measure which is in line with the provisions of the Council of Ministers on imports and to complement the system of prior registration of shipments. The measures aim to protection of national industry and control of the foreign trade system. Working with documentary credits will allow Egyptian banks to supervise the entire import process in order to rReduce invoice value manipulation and customs payment evasion.
Shipments of up to 5,000 US dollars or its equivalent in another currency, medicines, serums and chemicals related to them and some food products, including tea, meat, chicken, fish, wheat, oil, are excluded from the application of this regulation. , powdered milk, lentils, butter or corn.
This initiative of the Central Bank to facilitate the opening of documentary credits is within the State plan to improve the trade balance in terms of speed, cost, safety and product quality.