The central bank has issued permission to private commercial banks to settle half of the shipping costs in foreign currency as accumulated freight payment receivables surpassed 150 million dollars.

Signed by Yinager Dessie (PhD), governor of the National Bank of Ethiopia (NBE), a letter sent to the Ethiopian Shipping & Logistics Services Enterprise (ESLSE) last week instructs the executives to receive part of freight payments in Birr.

Commercial banks owe the state-owned shipping enterprise close to 7.8 billion Br, unable to find the foreign currency to settle the receivables.

A rule enacted a decade ago required importers to pay for freights, through their banks, in foreign currency. Last week's directive changed this rule. Commercial banks are told to collect freight fees in Birr and transfer half the amount to the shipping company at the end of every month, in a foreign currency. The central bank's latest move applies to all imports, except for wheat, sugar, coal, and fertiliser, which the government mainly imports.

The move comes as banks struggle with forex mobilisation following the central bank's tightened retention rules. They must surrender 70pc of forex earnings from exports, remittances and transfers to non-governmental organisations (NGOs), beginning January this year. The balance is to be divided between the banks and exporters.

A year ago, banks used to enjoy access to 70pc of forex unused by exporters within 30 days of deposit.

The central bank adjusted the retention policy due to the urgent need to beef up the country's foreign currency reserves, which is inadequate to cover the ballooning import bills and external debt payments. Ethiopia's foreign exchange reserve has dwindled below two billion dollars to cover less than two-month imports.

Over the first half of the year, the federal government spent 2.1 billion dollars on importing essential goods and a further one billion dollars on servicing external debts. The deficit has been exacerbated by dwindling loans and grants from development partners.

Global supply chain disruptions stemming from the effects of the COVID-19 pandemic have only made things worse. They have prompted the Enterprise to quadruple freight charges over the past year. The cost of shipping a 40ft container from ports in China, Ethiopia's largest trading partner, has increased to nearly 13,000 dollars.

The Enterprise, too, is yet to pay 100 million dollars for rentals and other fees, disclosed Roba Megerssa, chief executive officer (CEO) of the ESLSE.