Egypt's General Authority for Supply Commodities (GASC) is considering paying for wheat at its next tender with 'at sight' letters of credit (L/Cs).

These are being contemplated as a response to Egypt's President Abdel Fattah al-Sisi encouraging authorities to secure the country's reserves of strategic commodities amidst fears of food shortages due to the impacts of the coronavirus pandemic.

Immediate payment

The state's grain buyer and the world's largest wheat buyer is contemplating using at sight L/Cs because they guarantee immediate payment on receipt of required documents.

The L/Cs would be paid through the Islamic Trade Finance Corporation, with which Egypt has enjoyed a long relationship.

Egypt and ITFC

In December, Egypt and ITFC signed an agreement for the North African country to receive US$1.1 billion in 2020 to help finance imports of commodities such as petroleum, petroleum products, gas, wheat, foodstuff and other goods.

Those funds are within the US$3 billion Fifth Framework Agreement signed in January 2018 by Egypt and ITFC.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.