Letter of credit ((L/C) flows in the Middle East may be slowing up in places according to data seen on SWIFT, the financial messaging network that facilitates transfers for financial institutions and corporates.

SWIFT's head of Middle East and North Africa, Sido Bestani, says this contrasts with other regional messaging trends seen on the network.

L/C costs

Bestani describes the L/C trend as "a bit curious" but cautions that the negative trend seen on SWIFT's systems may be due to the network not seeing all documentary credit flows.

He suggests that other reasons may include the relatively high cost of L/Cs for corporates that are consequently choosing to deal on open account terms.

Double-digit growth

In terms of other cross-border SWIFT transactions, Bestani reports double-digit annual growth in some areas, such as between the UAE and Saudi Arabia.

An increase in messaging is also being seen in domestic transactions in some countries, including Qatar, Bahrain, Kuwait and Lebanon but not Saudi Arabia and the UAE, which have their own clearing systems.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.