Egypt considers stopping using dollars in ports

In coordination with the General Authority for Investment and Free Zones (GAFI), the Egyptian Ministry of Finance is studying the possibility of dealing in Egyptian pounds for shipping agencies operating in the country. In a letter, Mohamed Maait, minister of Finance, told Ibrahim El-Araby, president of the General Federation of Chambers of Commerce (FEDCOC), that the ministry received a proposal to deal in local currency instead of foreign currencies to reduce pressure on foreign currency to pay local trading expenses in sea transport companies. This would not include payment of freight.

FEDCOC had submitted a proposal to the Ministry of Finance that includes stopping dealing in dollars to ease additional burdens resulting from demurrage fines to shipping lines that are paid in the US currency. Demurrage is a charge applied to containers that are left at the port longer than their allotted free time.

Several Egypt-based companies supported the suggestion, stressing that it would contribute to cutting imports costs as well as streamlining customs clearance. Transport firm GCS executive director said that the decision would have very good effects for the Egyptian companies, but she believes the shipping agents will object. The executive says that the Egyptian companies pay fines and security, transport, and loading and unloading expenses in foreign currency, and the companies that provide these services are Egyptians. Sending this currency overseas later causes a decline in foreign exchange reserves, she warns.

The executive believes that, if the decision is implemented, it’ll significantly contribute to cutting importation costs, which would in turn affect the price of the final product. She says all expenses paid by the importers currently translate into costs for the final consumer. According to Sadek, taxes that could be paid in local currency instead of dollars account for 20% to 25% of the financial transactions in Egyptian ports. She says it’s a very large percentage that would contribute to reduce the dollar crisis in the country.

The head of the International Division of Transport and Logistics Services of the Cairo Chamber, Ayman El-Sheikh, argues that a study must be carried out to consider the current situation and make a decision on paying for all logistics services in Egyptian ports in the local currency, except of freight costs, as shipping agents follow international policies from the countries they come from, he says.

In a statement sent to ANBA, he stressed that Egypt is well positioned with international shipping agents seeking to invest in the country, and all must follow the rules and regulations of the Egyptian system for the best interests of the country. According to El-Sheikh, importers struggle to get foreign currency to pay for imported goods via letters of credit, so paying for unloading and security taxes and fines in dollars increases the price of the imported products for the final consumer.

Source: ANBA –  Brazil Arab News Agency

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https://anba.com.br/en/egypt-considers-stopping-using-dollars-in-ports/

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