Reduced by severe shortages of forex, once again the Ethiopian government has launched a study that will allow it to liberalize it financiallysystem al.
Involving experts from the World Bank, the study launched by the government aims to address the chronic problems in Ethiopia's financial sector, opening the sector to foreign banks, introducing capital markets, among others, according to Yinager Desse, the new governor of the sector. National Bank of Ethiopia (NBE).
In presenting the NBE's last eight-month performance report, Dr Yinager told lawmakers on Friday that the strong currency that Ethiopia is currently generating is just allowing the country to import fuel and medicines. The country's import revenue over the last eight months has declined 9.4 percent from the same period last year, according to Yinager, who said US $ 1.64 billion was obtained from imports over the past eight months.
The governor also indicated that, during the same period, the country obtained 3.82 billion US dollars in remittances. Meanwhile, during the same period, the country imported goods valued at 10.5 billion US dollars. Ethiopia's remittance income increased by 1.3% compared to the same period last year. Of the total, the country spent US $ 1.73 billion on fuel imports.
Even if there is not enough forex for importers, according to their interest, at the moment the country's exchange reserve may cover 2.6 months of basic import of the country, according to Governor Yinager.
Ethiopia signaled its readiness to reform its financial sector by opening its doors to foreign banks when its parliament approved the African Continental Free Trade Area agreement. Among others, AfCFTA parties are expected to liberalize their financial sector, among others.
Sometimes in Ethiopia it takes several months for the private sector to open a letter of credit and secure the government's forex for the import of goods.