LETTERS OF CREDIT IN ALGERIA

[luisgraca]

Hi Members,

I'm searching for the legal/official documentation that states that almost all the imports from Algeria need to be done through letters of credit.

Do you know reason? to have more control in their exports?

Many of them have a "so called" 1st payment of around 15% at sight but made under the LC with the presentation of a guarantee. Why this 15% under the LC?

Any of you knows the reason?

Cheers from Portugal

[picant]

Hi Pal,

I have more experience in exporting to Algeria then importing, however it is quite normal to p an
Advance payment of 15% against a APB and the balance when goods are shipped.
Probably "loi de finance" is stating the import regulation.
One question: Bonds are direct or under counterguarantee.
Ciao

[luisgraca]

Hi,
Thanks for the reply.
They are w/ counterguarantee.
The goods/services are being exported from Portugal.

The thing is that if your are in the presence of a confirmed LC the fact those 15% are a so-called advance payment there's the doubt where they should be part of a confirmation or not. I'm not finding any Algerian legal document that states what i've mentioned before. There are some documents dated of 2009 and 2014 when the use of documentary letters was considered mandatory.

I believe that if importer/exporter have a commercial contract they will use the same terms at the LC even with that 15% advance. But, since it is in the LC it'll be the 1st negotiation of documents .

Hope i was clear enough,

Cheers,
Luís

[picant]

Hi Pal,

15% of Advance Payment is not included in the confirmation amount!
The risk for the confirming bank is only for 85%, if the advance payment has been duly executed!
Other comments appreciated
Ciao

[TaiOanlan]

@luisgraca
Is your role Beneficiary bank?
Is it Confirmation L/C?
In case of it is Confirmation L/C, is the L/C requiring Confirming bank to issue guarantee?

Regards,