Egypt's General Authority for Supply Commodities (GASC), said that it has changed the terms of payment for wheat purchased in its tenders, a move that may give the state-grain buyer more time to pay amid an acute shortage of foreign currency.
"The letters of credit can now be opened up to 180 days after signing the contract," Mamdouh Abdel Fattah, GASC's vice chairman said on Wednesday. There had been no ability to defer payment before.
"This basically means GASC is giving itself more time to pay," one Cairo-based trader said. "It could lead to a rise in the prices offered to GASC today," he said.
Abdel Fattah declined to give a reason for the change, but traders said that it was prompted by the country's worsening currency crisis.
Egypt's 2011 uprising drove away tourists and foreign investors, starving it of hard currency it needs to pay for imports of everything from food to gasoline to raw materials. Foreign currency reserves have halved to $16.4 billion since then.
"This is due to the tightness in dollars," one Cairo-based trader said.
When state tenders are awarded the firm selling the commodity asks for a letter of credit from one of Egypt's state-owned banks, which is then confirmed with its own bank.
Some traders have said they experience delays receiving letters of credit for the goods they supply to state buyers.
Egypt, one of the world's largest wheat importers, imports around 10 million tonnes of the grain each year to feed its population of 90 million.
Egypt's central bank tightened trade
