The Clap
The Central Bank of Egypt (CBE) has abandoned the use of the more complex & time-consuming letters of credit in favor of the more smooth-sailing documentary collection.
What
This move & its timing were expected, as they were both announced in the CBE’s decisions on October 27th, 2022.
So what
Imports declined sharply since the decision to shift to using letters of credit was made last March, with prices of soy & corn for example doubling in Egypt due to local supply shortage despite steady global prices.
Now what
While this is a move in the right direction, banks will be the ones financing the import operations rather than the importers themselves, & that’s something that negatively affects the dynamics of the market, say importers.
