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BusinessForex directive undergoes slight amendment

Forex directive undergoes slight amendment

The National Bank of Ethiopia has slightly changed a directive which was introduced a year ago. The directive was introduced in order to allocate and manage foreign exchange (forex) in a transparent and sound manner.

The old directive like the amended one focused on allocating forex in a first-come, first-served basis. It repeals the tradition in the banking industry where exporters were allowed to gain prior access when they demand forex as an importer.

The latest directive has somehow modified the way application registration is reported to national bank. According to the amended directive, each bank shall send the foreign currency application registration and approval detail as per the attached format through a secured email address to be notified by central bank and a copy of pro-forma invoice, weekly.

On the previous directive, which was introduced last year, banks are not required to send pro-forma invoices.

According to a bank CEO, who spoke to The Reporter, the central bank came with the new addition of reporting the invoices in order to regulate banks and forex applicants in case of altering the amount of hard currency and the purpose after their request has been approved.

Before the amendment of the directive, banks were instructed to submit their comments based on the old version of the same directive.

“None of our comments are included,” another CEO, who requested anonymity, told The Reporter.

For instance, a few bank executives have commented on giving the upper hand to exporters, depositors and high-value customers while allocating forex. Moreover, some banks have also requested for their executives to gain prior access in getting forex.

“To our surprise none of our comments are included,” a senior executive of a private bank said.

The new directive has also provided clarifications on priority sectors that are listed to gain primary access of forex.

Import of fuel, motor oil, lubricants, LGP gas, pharmaceutical products and fertilizers will continue to be prioritized.

In the latest amendment, it is also stated in a detailed manner that spare parts for construction machineries that would be used by the construction companies themselves, whose total value does not exceeding USD 50,000, will also be given priority.

“If this is uniformly and fairly practiced by all, it is a good thing,” another CEO said. “It is all about the practice.”

In cases of violating articles mentioned in the directive, banks will be subjected to a fine of 10,000 birr for each violation.

Signed by Yenehasab Tadesse, director of NBE’s foreign exchange monitoring and reserve management directorate, the new directive has become effective as of March 20, 2017.

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