Oxford Economics described in a note to its clients the timing of the Central Bank of Egypt’s decision to ban those who do not have documentary credits from importing as suspicious.
The giant economic analyst says that the real goal behind issuing this decision at this time is to keep the import bill under control, in light of the increasing pressures on the external situation of the Egyptian economy. The central bank aims from this decision to restrict imports by imposing new procedures, despite the fact that documentary credits are a common way to ensure the creditworthiness of importers. Egyptian business organisations have objected to the recent decision of the Central Bank of Egypt to amend import regulations, issuing a joint statement calling for the immediate cancellation of the decision due to its negative repercussions on supplying industries with their production requirements, intermediate goods and spare parts.
The objecting organisations include the Egyptian Businessmen Association, the Federation of Egyptian Industries, and the General Federation of Egyptian Chambers of Commerce. A large number of heads of local companies also called on the Central Bank to reverse the decision, saying that it will increase production costs, which will cause the prices of goods to rise in the local market, and negatively affect the competitiveness of Egyptian exports. They added that the decision did not take into account companies that do not have credit facilities, especially small enterprises.
On the other hand, the Governor of the Central Bank, Tarek Amer, stressed that the new rules are irreversible. He also called on businessmen to expedite reconciliation and not to waste time in a controversy that has nothing to do with the stability of Egypt’s foreign trade and the soundness of its performance.
Ali Issa, head of the Egyptian Businessmen Association, said that the latest decision is setting the wheel back, as it places severe complications that cause bottlenecks in production requirements and raw materials needed for industrial production. He added that all this will raise the cost of production, and thus will be reflected on the consumer as well as Egyptian exports. Issa pointed out that the documentary credit system is applied in a limited number of countries due to its complexities, unlike the previous system of collection documents. He stressed that insisting on implementing the decision will lead to a shortage in supplies of production requirements, which are already suffering from a global supply crisis.
Matta Bishai, head of the Internal Trade Committee of the General Division of Importers, said that the amendments were issued suddenly and without consulting the business community. He stressed the rejection of many local and European suppliers of the new system because it would increase expenses on the importer, calling for the need to reconsider the decision, especially since many importers are facing several difficulties at the present time.