On February 13th, the goverment of the Central Bank of Egypt stated that the new regulation requiring importers to pay by letter of credit will be officially implemented in March. This new regulation has caused an uproar from all walks of life!!

According to past experience, Egyptian importers mostly use TT or DP to pay for goods, which creates a lot of room for technical operation in international trade, and also leads to the risk of underreporting the import unit price, which in turn affects the taxation of the national government. The large trade deficit with imports is greater than exports, so the Egyptian government has been trying to control the rising import bills and current account deficit. According to the statistics of the 2020/21 fiscal year, the gap reached 18.4 billion US dollars, which continued to expand by nearly 50% compared with the previous period. In view of this, the government strongly announced that from March 2022, all payment by importers will be changed to letters of credit!

Fortunately, the Central Bank of Egypt (CBE) excluded the import of medicines, serums, related chemicals, and some food commodities from the aforementioned decision to halt all collection import transactions and switch to documentary credits. These include: tea, meat, chicken, fish, wheat, cooking oil, infant formula, milk powder, beans, lentils, butter and corn. The exclusion decision also applies to shipments and transactions of goods valued up to $5,000 or the equivalent in other currencies.

Meanwhile, the Federation of Egyptian Banks said in a statement that the CBE had also instructed all banks to reduce their commissions for issuing documentary credits to the same as those paid for collection documents, adding that a copy of the statement had been made known to the bank industry.