EGYPT: New Letters of Credit Import Rules Implemented

The Central Bank of Egypt (CBE) now requires importers to use letters of credit (LCs) to finance imports, despite complaints from traders and business groups. The new rules eliminate the current cash-against-documents system, which, according to traders, requires lower payment in advance. According to the Federation of Egyptian Banks (FEB) the CBE has mandated banks to only accept LCs to facilitate goods import, effective from 22 February 2022. Banks have also been ordered to reduce LC fees to match the cash-against-documents costs, but business groups have still asked the government to reverse the decision. 

Branches of foreign firms and their subsidiaries are exempted from the new rules. Also exempted are traders in essential goods, such as medicines, poultry and meat, fish, corn, wheat, beans, oil, tea, baby formula, milk powder, butter and chemicals, as well as goods valued at less than US$5,000.