The National Bank of Ethiopia (NBE) has issued a new directive permitting foreign direct investors, embassies, and international organizations to import refined petroleum using their own foreign currency. The policy change is designed to ease severe pressure on the country’s domestic foreign exchange reserves.
Fuel is Ethiopia’s largest import expense, costing roughly $4.2 billion annually and swallowing a quarter of the nation’s foreign currency. Amid global supply chain disruptions and acute domestic hard currency shortages, the state has recently struggled to finance timely fuel purchases, resulting in strict quotas and massive lines at gas stations for ordinary motorists.
The Franco-Valuta system allows eligible entities to import goods by paying with foreign currency held abroad, completely bypassing Ethiopia’s domestic banking system. While the central bank previously permitted limited Franco-Valuta practices, officials say a lack of clear legal guidelines in the past led to customs misclassifications, capital control violations, and illicit financial flows.
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