Egypt’s Central Bank Mandates LC Use for Imports

The Central Bank of Egypt announced in mid-February 2022 that Egyptian banks must only accept letters of credit for the purchase of imports. Exemptions exist for the import of medicines, certain food and drink, imports valued at less than USD 5,000, and imports by foreign companies and their subsidiaries. Banks may accept invoices for goods shipped before the change was announced.

Several trade and business associations have expressed staunch opposition toward the new rules, which take effect 1 March 2022, saying that they could aggravate supply chain problems, increase production costs, and worsen inflationary pressures. According to media reports, banks have been asked to facilitate LC use by lowering issuance fees to match the fee structure for documentary collections.