Letters of credit (L/Cs) have once more become hard to come by in Egypt as its financial crisis makes it difficult to pay for food imports.

The L/C shortage reflects funding problems which have surfaced and resurfaced over the last few years.

State imports

Egyptian importers are seeing some delays with L/Cs being issued for commodities they supply to state purchasers, including the General Authority of Supply Commodities (GASC), which imports much of Egypt's food.

There are reportedly several shipments "ready and waiting on their L/Cs that have been delayed for over a month in some cases," a Cairo-based trader told local media recently.

Central bank role

Suppliers to GASC and other state importers routinely request L/Cs issued from one of Egypt's state-owned banks and confirmed with their own bank.

Egypt's central bank should provide L/C cover to the country's state banks, but there are reports that there have been delays in the provision of this cover.

In the wake of social, economic and political turmoil since Hosni Mubarak was ousted as president in early 2011, Egypt has experienced repeated problems obtaining L/Cs for transactions for several commodities, (DC World News, 28 June 2013, 26 June 2013 and 6 September 2012).

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