Russia seeks lower transaction costs on Egypt wheat payments, lobby group says.

By Reuters

Russian grain exporters will propose ways to reduce transaction costs on wheat payments to Egypt’s new commodities importer, the head of the exporters’ lobby group was quoted as saying in an interview with Dubai-based publication Asharq Business.

In Egypt, Mostakbal Misr for Sustainable Development, the development arm of the Egyptian Armed Forces, has assumed responsibility for importing strategic commodities, including wheat, replacing the General Authority for Supply Commodities .

“We have received confirmation of the powers of Mostakbal Misr and are now awaiting an invitation to the new agency’s tender,” said Eduard Zernin, head of the Russian Grain Exporters and Producers Union, in the interview with Asharq Business.

“We have proposals on how to reduce transaction costs in grain settlements under the conditions of limited access for Russian grain exporters to the global financial system,” he added.

The exporters’ access to the global financial system is restricted due to Western sanctions.

Zernin also said in the interview that the high transaction costs for Russian wheat exporters were one of the factors affecting global prices.

Russia’s foreign trade has suffered from high costs for international intermediaries as well as significant payment delays due to Western sanctions imposed over its military actions in Ukraine.

Even banks in countries that actively trade with Russia are exercising caution when dealing with Russian counterparts to avoid becoming targeted for secondary sanctions.

Egypt, one of the world’s largest wheat importers, ranks among the top five importers of Russian wheat. Zernin said Russian exporters were ready for fair competition in tenders under the new importing authority.

Zernin said that Russian exporters expected Mostakbal Misr to maintain the practice of financial guarantees that developed for GASC tenders, such as letters of credit payments backed by one of Egypt’s major banks.

“Deviating from the letter of credit form could increase the cost of Russian wheat due to heightened financial risks, which they would like to avoid,” Zernin said. He said Russian exporters were planning to meet with Mostakbal Misr in early 2025.

This article was been republished from The Livemint.