The Ethiopian government has banned banks until further notice from providing foreign currency to importers of around forty products, in particular vehicles or alcohol, effectively preventing their importation, to reserve for priority goods the foreign currency which the country lacks.
Ethiopia applies strict legislation on the exchange, holding and use of foreign currencies. Importers must register with banks to obtain the necessary foreign currency for their operations.
In a letter addressed to the central bank, the Ministry of Finance explains that “it becomes necessary to use foreign currencies specifically for basic foodstuffs, medicines and medical products (…) raw materials or capital goods ” intended for local manufacturing.
Attached to the letter, posted Saturday on his Twitter account by Industry Minister Melaku Alebel Addis, is a list of products for the import of which “it will not be authorized to issue foreign currency, for an unlimited period”.
The list contains various products, ranging from motor vehicles and motorcycles to wall clocks, umbrellas, carpets or soaps, through alcohol, perfumes or cigarettes.
No recent public figures are available regarding the country’s foreign exchange reserves.
At the end of March, the Ethiopian newspaper Reporter, citing the central bank’s semi-annual report to MPs, indicated that the country’s foreign exchange reserves had fallen by the end of December 2021 to $1.6 billion, or just 1.3 months of imports. .
A largely importing country, Ethiopia is “in structural shortage of foreign currency”, recalled the general management of the French Treasury in its periodic bulletin at the beginning of October.
Authorities have recently tightened laws on foreign currency holdings for individuals and businesses and banned all foreign currency transactions in Ethiopia.
They also cracked down on the black foreign exchange market in early October, when the dollar there exceeded 100 birr, almost twice its official exchange rate in Ethiopia (about 52 birr), amid an explosion in demand for currencies, according to the Ethiopian economic press.
The NBE announced in early October that it had ordered the blocking of nearly 400 bank accounts, the holders of which are suspected of illicit currency trading and promised financial rewards to those who denounced players in the parallel market.