FORTUNE+ VIDEO SPONSORED CONTENTS ADVERTORIALS FORTUNE AUDIO Fortune Careers New TRADE AFRICA New

Fortune Logo

Ethiopia Lifts Foreign Exchange Restrictions in Sweeping Reform

Jul 29 , 2024

In a momentous departure from its erstwhile tightly controlled policies, the National Bank of Ethiopia (NBE) has granted permission to commercial banks to freely negotiate foreign currency exchange rates with clients and amongst themselves.

They are granted, effective today and alongside exporters the liberty to hold onto their foreign exchange earnings, which is a departure from the prior obligation to surrender forex to the central bank. Non-bank foreign exchange bureaus have been given the nod to conduct business, armed with the capability to trade foreign currency cash notes at market rates.

A part of an extensive overhaul of the country's foreign exchange regime by the Central bank Governor Mamo Mehiretu, the NBE has committed to limiting its interventions in the forex market, primarily to maintain order. A shift to a market-based determination of exchange rates was announced by Governor Mamo, marking an epoch-making crucial from the historical inflexible policies. Yet, capital account outflows will continue to be under control.

Exporters have now been permitted to hold onto 50pc of their foreign exchange proceeds, a noticeable increase from the earlier 40pc. The waiting list system for banks' allocation of forex has been done away with, making it easier for importers to gain access. Ethiopian residents can now revel in the simplified rules on foreign currency accounts, which permit them to open accounts based on incomes in forex, inclusive of remittances and salaries. They can open these accounts for disbursements related to foreign transactions. The ceiling on interest rates for foreign loans to private entities has also been removed, a step in the direction of attracting more investment, according to the Governor.

The NBE has also done away with an array of import restrictions, notably the ban on 38 categories of products, thus liberalising foreign exchange access for importing a broad spectrum of goods and services. Firms within special economic zones have been allowed to keep 100pc of their foreign exchange earnings, courtesy of the special privileges granted to them. Neither will restrictions on franco valuta imports stay in place.

According to Governor Mamo, who made a public statement earlier morning today, these measures will augment Ethiopia's economic competitiveness, unlock export potential, and pull in foreign direct investment (FDI).

"These bold steps aim to rectify long-standing economic distortions and promote a more dynamic and inclusive economic environment," said the NBE in a statement issued today, July 29, 2024. “There is a strong expectation that the economy will be on a trajectory of robust growth in years to come.”



Related Posts

Share This Post
Linkedin
Google+


Most read

Latest News

Editor's pick

Commentaries

Ethiopia's Taking a Page from Kenyas Market Playbook Can Pay Off

The launch of the Ethiopian Securities Exchange (ESX) in January this year marked a l...

Will the Dollar Continue to Fall?

Although I no longer live and breathe the markets on a daily basis, I have never forgotten some key lessons I learned early on as an economi...

Fineline

Leaders of the National . . .

Leaders of the National Election Board are in a charm offensive mood, of a sort. Last week, they organised a rare tour for members of the me...

When the country’s most. . .

When the country's most senior diplomats and envoys return back to their posts after two-week debriefings, they leave behind a point or two...

Editorial

Preventing War Far Cheaper Than Paying Its Deadly Price

Mar 23 , 2025

Getachew Redda, head of the Tigray Interim Regional Administration (TIRA), at least u...

A Country Governed by Guesswork, While Millions Lost in the Shadows

Mar 16 , 2025

Ask anyone about the population of Addis Abeba, and a straightforward answer proves e...

The GMO Experiment Can Be Harvest of Hope, Not Seed of Trouble

Mar 9 , 2025

Five years ago, 11 non-governmental organisations (NGOs), together with 40 allies acr...

Mismanaged, Trade Liberalisation Could Pour Cold Water on Local Hopes

Mar 2 , 2025

The domestic economy has endured a punishing half-decade. A global pandemic throttled...

Gallery

Parliament Approves New Cabinet Members

Oct 6 , 2021

Parliament Approves New Cabinet, Incorporates Opposition Leaders Lawmakers have approved today the nominations of 22 ministers, including three opposition leaders. Two MPs have voted against, while 12 abstained...

2020 in Posterity

Jan 5 , 2021

TIGRAY VOTES DESPITE "NULL & VOID" THREAT

Sep 9 , 2020

IN-PICTURE: LAUREATE'S RECEPTION  

Dec 14 , 2019

PM Abiy Ahmed (PhD) at a Gala Dinner Called for the Awarding of the Félix Houphouët-Boigny Peace Prize

May 6 , 2019

Faces, Voices of Addis Abeba

Apr 26 , 2019

Sunday With Eden

The Convenience Trap

Over the weekend, I watched a mother I know closely hand her children a bag of chips and packed juice for lunch. She isn't the type to welco...

Opening Up: A Risk Worth Taking

A friend once shared her family's struggles with a group of people who had admired her life. They used to say they envied her. But after she...

Life Matters

Shining Light on Small Businesses

The bustling streets of Addis Abeba now carry a heavier weight for business owners. The cost of doing business has been steadily rising, wit...

Scrolling for Symptoms: The Pitfalls of Online Self-Diagnosis

It is striking how much social media has threaded itself into the fabric of our lives. Beyond connecting...