The Central Bank of Egypt (CBE) has reportedly issued a directive ordering the country's banks to allocate US dollars for letters of credit (L/C) to be used for the importation of non-essential goods requiring pre-approval.

The move is apparently a response to the ongoing backlog of import requests that has built up over the past two years, according to unnamed banking sources who spoke with the Asharq Business news and business media platform.

Import policies

In March 2022, the central bank restricted financing of non-essential goods including cars, mobile phones, and electronics, under regulations designed to dampen demand for limited foreign currency reserves amidst rising economic pressures.

The CBE's latest directive concerning non-essential imports was issued in August, after which arrangements of US dollars for these goods was halted.

Current policy

Banks must currently consult with the CBE and obtain specific approvals to finance items from a 13-item list of non-essential goods, which includes cars, mobile phones, electronics, and children's toys, as well as certain agricultural products like seeds and fresh fruits.

If the CBE has ordered banks to allocate US dollars for L/Cs for importation of non-essential goods, this would be significant easing of a longstanding and restrictive policy.

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