Ethiopia has instructed commercial banks to limit foreign currency for businesses importing non-priority goods to boost local currency’s strength and increase foreign revserves.
The order saw a freeze in the importation of dozens of items such as alcohol and cars, as businesses must register with banks to obtain the foreign currency needed before they could bring goods into the country.
The Ministry of Finance, in a memo to Ethiopia’s central bank, emphasized the need to restrict the use of foreign currency to importing food, medicine and medical equipment, and raw materials for manufacturing.
In a letter posted on the Twitter account of Industry on Saturday, Minister Melaku Alebel Addis said the ministry was “sending a list of goods that will not be allowed forex for an indefinite period of time,”
The list of some 40 products includes vehicles and motorcycles to wall clocks, umbrellas, carpets and soaps, alcohol, perfumes and cigarettes.
In late March, the National Bank of Ethiopia, according to local newspaper, indicated reserves had fallen to $1.6 billion at the end of 2021, covering less than 2 months’ worth of imports.
A largely importing country, Ethiopia is in structural shortage of foreign currency”, the French Treasury said in a periodic bulletin this month.
It should be recalled that Ethiopian government recently enacted laws on foreign currency holdings for individuals and businesses and banned all foreign currency transactions in Ethiopia.
Black market exchange of foreign currency, where the US dollar can fetch almost twice the official exchange rate amid a surge in demand equally faced a crackdown this month.
In a bid to mitigate linked to illicit currency trading, the central bank also blocked nearly 400 bank accounts with a promise to doll out financial rewards to those who denounced players in the parallel market.
