The Ethiopian government has ordered banks to reject requests for foreign currency to buy so-called non-priority products. Ethiopian Industry Minister Melaku Alebel Addis defended the move, saying it would allow local manufacturers to grow and become competitive. The restrictions are to remain in effect for an indefinite period.
Eliminate the pressure of foreign products
The Ethiopian government has reportedly ordered banks to reject requests for foreign currency to buy what the finance ministry calls non-priority goods. In a letter to the country’s central bank, the ministry reportedly said banks should only approve currency requests if the customer’s purpose is to import food, medicine or medical equipment. Foreign currency should also be made available to importers of raw materials, the ministry reportedly said.
Justifying the seemingly protectionist policy, Ethiopian Industry Minister Melaku Alebel Addis suggested in a tweet that the latest currency restrictions are necessary as they give local products a chance. Addis insisted that countries with well-developed industries could only achieve this feat by limiting or eliminating pressure from foreign products.
Worsening Ethiopian Forex Woes
The second step, according to the minister, was the introduction of “their products to the world market and competition”. Addis ends the tweet by urging local manufacturers to take advantage of the policy change. He said:
You must take advantage of this opportunity.
According to a report by AFP, some of the products and imports affected by the government’s latest currency conservation measures include motor vehicles, alcoholic beverages such as wine and whisky, artificial jewellery, perfumes and cigarettes.
The Ethiopian government, which has waged a bloody war against rebels in Tigray province, faces a continued shortage of foreign currency. At the same time, the gap between the official exchange rates of the local currency and those of the black market widened to an all-time high.
To counter currency shortages as well as the depreciation of the Ethiopian birr, the country’s central bank – the National Bank of Ethiopia – announced in September that it had revised down the amount of foreign and local currencies that travelers Ethiopians can take out of the country. Prior to this, the central bank had also advised against trading cryptocurrencies.
Meanwhile, according to Addis, its government’s latest currency restrictions are set to remain in place indefinitely.
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