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Forex Retention Ratio Under Consideration



The foreign exchange ratio where the central bank appropriates 70pc of earnings by importers to the public sector is under review, disclosed a senior federal government official.

Hassen Mohammed, state minister for Industry, told a panel of European businesses gathered today at the Hyatt Hotel, that his Ministry has taken the issue to the federal macroeconomic team, chaired by the Prime Minister, for review.

"It's under consideration," he told a panel hosted by the European Union Business Forum-Ethiopia, a lobby group of 155 EU companies investing in Ethiopia, such as Unilever and Heineken.

However, he failed short of stating the ratio changes his Ministry proposed.

Ethiopia suffers a wide trade and balance of payments deficits, dwindling its foreign exchange reserves only enough to cover less than a month's worth of imports. It imported items valued at over 17 billion dollars last year against four billion dollars in imports.

Authorities at the National Bank of Ethiopia (NBE) have imposed a forex retention policy for exporters to keep 30pc of the forex they generate. This policy remains a profound source of grievances and misgivings for businesses and banks.

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