Egypt Takes Issue With ING Decision on Lending for Wheat Cargoes
(Bloomberg) -- Egypt, the world’s biggest wheat importer, objected to ING Groep NV’s reported decision to suspend lending for wheat shipments sold to the state-run buyer.
The nation’s response comes after people familiar with the matter said that the Dutch lender has stopped backing deals for cargoes sold to Egypt’s state buyer, the General Authority for Supply Commodities. That decision came as Egypt has slowed processing of deals in recent years and as ING gets hit by payment disputes involving cargoes sold by AOS Trading DMCC to GASC.
“Egypt issues payments for the cargoes once suppliers have fulfilled the terms of the contract,” Nomani Nomani, an adviser to the supply minister, said by phone, adding that suspending lending tarnishes the country’s image.
Read more: Egypt wheat imports are said to stumble as cargoes held back
Egypt’s supply ministry said in a statement that it was “incumbent on any bank that provides a line of credit to a supplier to ensure that this supplier is able to meet their obligations.”
AOS and its Egyptian sister company Al Wehda, which supplied 18 percent of GASC purchases last season, were last week removed from the list of approved companies to participate in tenders after repeated delays in delivering cargoes. The Dubai-based trader was among ING clients, which also include Aston, Solaris Commodities, Alegrow and Orsett.
ING declined to comment.
The move by ING risks reducing the number of offers Egypt gets in tenders. The bank has financed about half of the wheat the country bought from Russia in the past two years, according to people familiar with the matter, who declined to be identified because the information was private.
Egypt relies on imported grain for its state-subsidized bread program that helps feed almost 100 million people. While the government has cut energy subsidies and raised taxes, it has largely steered clear of curbing food subsidies for fear of stoking unrest in a nation where around half of the population lives near or below the poverty line.
Egypt has faced other issues over its wheat purchases. In recent years, a lack of agreement over levels of the common ergot fungus led to some cargoes being rejected and traders boycotting tenders or offering supplies at a premium.
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