Egypt will go back to paying its grain suppliers on letter of credit (L/C) terms with payment within 180 days instead of immediately according to a government source.

State grain buyer General Authority For Supply Commodities (GASC) said in January it would start immediate on-sight payment after obtaining financing from the International Islamic Trade Finance Corporation (IITFC) to pay for its imports.

IITFC deal

Egypt's investment and international cooperation minister, Sahar Nasr, signed in January a US$3 billion agreement with IITFC to fund the import of basic commodities including oil and petroleum products as well as wheat.

GASC secured US$1 billion of the IITFC financing. Before that finance became available, the state buyer's L/Cs were being issued prior to shipment, with payment guaranteed within 180 days.

Two payment methods

Officials have suggested that on-sight finance from IITFC may still be available alongside the reintroduced L/C terms in the future.

Suppliers of wheat to Egypt quote lower prices for shipments that are paid for on-sight.

Egypt spends around US$1.5 billion each year for wheat as part of a bread subsidy programme on which many of the country's almost 100 million people depend.

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