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Wednesday, 23 February 2022

More clarity from CBE on new import rules

The Central Bank of Egypt has responded in a document to queries from importers on its recently issued rules requiring them to get letters of credit (L/Cs) for their purchases instead of the common practice of documentary collection, Hapi Journal reports, picking up a story from state news agency MENA.

Temporary imports and imports for re-export are exempt from the new rules, the CBE clarified. The CBE last week gave exemptions to imports by foreign companies, those made via express shipment, imports of goods worth up to USD 5k, and a raft of commodity and pharma imports.

But imports by freezone companies are not exempt: Freezone companies will not be treated as if they are located outside of Egypt for the purposes of the new rule — that is to say, purchases conducted in EGP between companies in free zones and local firms will not require L/Cs, whereas imports to freezone companies from abroad conducted in foreign currencies will.

Also: Standby letters of credit — which act more like guarantees on the importer’s purchase in the event that they fail to meet contractual obligations — can be issued by banks but will be reviewed on a case-by-case basis by the CBE.

Need a refresher? As of yesterday, banks can only accept L/Cs to facilitate the purchase of imports and will no longer accept documentary collection. The central bank has announced several measures to facilitate the move, which has drew criticism from trade and industry organizations, who said it could drive up the price of goods in the local market and hurt the competitiveness of Egyptian exports.

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