Cairo – The Central Bank of Egypt has decided the country will only accept letters of credit, also known as documentary credits, in the execution of import operations from the beginning of March this year. An exception applies only to branches and subsidiaries of foreign companies in Egypt, from which other billing documents will be accepted for goods already shipped before the measure came into force.
The Central Bank said in a letter sent this Monday (14) to banks operating in the Egyptian market, of which the ANBA team in Cairo obtained a copy, that the decision comes within the framework of the guidelines of the Council of Ministers on the governance of import processes, in addition to activating the shipment pre-registration system.
Two importers who are members of the Egyptian chambers of commerce, who declined to be identified, asked the Central Bank to reconsider the guidance to banks, issued on February 12. The sources highlighted the decision is not in harmony with the country’s efforts concerning its regional and international situation, represented in trade policies, especially those aimed at foreign trade.
Recalling the latest outcomes in Egyptian international relations, such as the European Union’s complaint against the procedures required by the North African country relative to the registration of imports, the business people ask for the reconsideration and reversal of the decision as soon as possible. They believe the measure could have adverse effects by confusing the market and disrupting supply and demand mechanisms.
Importers believe the requirement could result in commodity prices rising in ways incompatible with most local purchasing capabilities. They recall imports are essential in Egypt’s production processes, with intermediate and primary commodities, raw materials, and packaging, having a positive impact on the country’s export capacity, attracting foreign investment, creating job opportunities, and contributing to raising the standard of living of citizens, according to the vision of the new republic.
The two sources pointed out Egyptian imports are currently a developmental structure, as the highest percentage of purchases in the international market is for production goods, whether intermediate or for investment, and raw materials. These range from 70% to 72% of Egypt’s total non-oil imports over the past three years. Imports of essential consumer goods, such as medicines, meats, frozen fish, dairy products, and others, represent on average 21% of total non-oil imports.
The two sources highlighted the continuity of administrative restrictions and protectionist measures, in general, could cause severe damage to Egyptian producers, especially SMEs. They believe local production will not be able to meet market needs given the high rates of domestic demand.
Translated by Ahmed El Nagari and Elúsio Brasileiro
