Ethiopia has liberalized its foreign exchange regime, enabling banks to set their own rates in currency trading but ending their monopoly with newly legalized competition from non-bank players.
The National Bank of Ethiopia (NBE) has announced sweeping reforms to liberalize its foreign exchange system and shift to a market-based regime, formalizing a major shift in policy.
NBE said on Monday the changes aimed to address distortions and support broader economic reforms underway in the Horn of Africa nation.
Key elements include adopting a floating exchange rate, ending surrender requirements for exporters and relaxing capital controls. Exporters can now retain up to 50 percent of earnings versus 40 percent previously.
Import restrictions on 38 goods are eliminated while rules governing bank allocation of forex for imports are scrapped. Non-bank currency traders can operate as bureaus set their own rates.
Controls on "franco valuta" imports and foreign currency accounts will be loosened. Limits on overseas borrowing costs and foreign investor access to domestic bonds and securities are removed.
