The Ethiopian government has restricted how much foreign currency residents and non-residents can hold in the country as well as the amount of the local Birr currency can leave the country.
The recent restrictions come amidst double digit inflation numbers, with August 2022 seeing over 32% inflation.
Ethiopia 🇪🇹 inflation at 32.5% in August 2022 pic.twitter.com/ygkbIPMmUa
— BitKE (@BitcoinKE) September 29, 2022
Chief Economist at the National Bank of Ethiopia, FIkadu Digafe, has recently expressed concern over the imbalance between the foreign currency supply and demand where he blamed the effects of continued civil conflict. Since 2019, the government has been devaluing the local currency to support dwindling foreign reserves, cutting the birr by 26% between February and May 2022.
A widening disparity between the official and black market rates has also been reported. On 22nd September 2022 the official rate quoted the Birr at 52.5 to the dollar, while it traded at 92 unofficially, reports suggest.
In the new rules:
- Persons traveling into or out of Ethiopia should not carry more than 3,000 Ethiopian Birr ($57) with them, with the bank saying ‘it had become necessary to limit the Birr holding amount for a person entering into and departing from Ethiopia.’
- The bank also now requires foreigners to convert all their foreign currencies at authorized forex bureaus or deposit to his/her foreign exchange account within 30 days of entry
- If foreign currency exceeds $4,000 or equivalent in any other convertible foreign currency, he/she has to present a custom declaration
- A person residing in Ethiopia is allowed to travel abroad by carrying a foreign currency if he/she present a bank advice issued for the purchase of the foreign currency within thirty (30) days from the bank advice
- Ethiopians who do not reside in Ethiopia but may visit are required to get a custom declaration for amounts greater than $10,000
- When non-resident foreign national of Ethiopian origin and Ethiopian National not residing in Ethiopia enters into the territory of Ethiopia carrying a foreign currency from abroad and travel back within 90 days from the date of entry stamped on the travel document by the Immigration and Citizenship Service, he/she has to present custom declaration, if the foreign currency amount exceeds USD 10.000 (USD Ten Thousand) or equivalent in any other convertible foreign currency
- A person entering into the territory of Ethiopia from a neighboring country using land transport carrying other foreign currency having a value of more than or equivalent of USD 500 (USD Five Hundred), shall declare at the boarder custom branches, and may travel by carrying such declared amount
Restrictions have also been placed on how much foreign currencies people in Ethiopia can trade.
It’s necessary to set conditions, limitations, and circumstances under which an Ethiopian, a resident of Ethiopia, and a non-resident or any other person who may process and utilize foreign currency. – National Bank of Ethiopia
Amidst war and rising inflation, the International Monetary Fund (IMF) expects the local Ethiopian economy to grow by 3.8% in 2022.
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