Earlier last week, the president explained that banks would help secure the necessary foreign currency in a matter of days
The Central Bank of Egypt (CBE) has canceled the letters of credit (LC) system, which has been blamed for a massive backlog at ports worth billions of dollars, as a requirement for importing into the country.
Prime Minister Mostafa Madbouly revealed that Egypt would phase out the LC system by December during October’s Egyptian Economic Conference.
Established in March last year, the system required Egyptian banks to only accept LCs for imports in a bid to curb foreign currency outflows from the country.
The CBE announced that it would restore the documentary collections system for imported goods, affirming the state’s assurances to ease import requirements.
Clearing the import backlog was crucial to ensure a stable supply of foreign exchange — a development that could open the door for another possible devaluation, explained Bloomberg in a piece about the LC system, citing analysts.
Earlier last week, the president explained that banks would help secure the necessary foreign currency in a matter of days.
Egypt’s shortage of hard currency prompted two devaluations of the EGP in 2022 and, most recently a 300 basis point hike in the benchmark interest rate.
