The Central Bank of Egypt (CBE) has signalled to local banks that they can start issuing letters of credit (L/Cs) for imports of certain foodstuffs as well as a range of consumer and industrial goods.

The move apparently responds to ongoing concerns and the economic impact of the rule introduced by the CBE in February 2022 that required all Egyptian importers to use L/Cs to finance their imports.

Imports allowed

Goods for which local banks can now start issuing L/Cs include mobile phones, food plants and seeds, fresh fruits, cocoa, jewellery, electric appliances, ready-made garments, furniture, and heavy equipment.

One non-essential import that banks are still not allowed to issue credit lines for is cars, according to sources in the banking sector.

Maintaining foreign reserves

The CBE issued new rules in February 2022 that required all importers to use L/Cs to finance their imports.

This decision was part of broader measures aimed at tightening control over foreign exchange outflows and stabilising the country's foreign reserves.

Controversial rule

The rule initially faced opposition from importers who argued that it would increase costs and delay the import process, especially for smaller businesses.

However, the CBE maintained that the measure was necessary to safeguard the economy and stabilise the exchange rate amidst global economic challenges.

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