Addisu wond.

Gov’t and business people at loggerheads over Forex

ESAT News
March 28, 2013
Ethiopian businesspeople have been unable to open Letter of Credit (LC) and import products due to severe shortage of dollars from the market. The government is only allowed to obtain hard currency for its mega developmental projects. This situation has recently led to tensions between the government and traders.
Although the government recently issued a directive stating that all traders involved in import and export businesses can obtain hard currency, the practice did not please traders. The new directive, which is different from the previous one, requires traders seeking Forex to first deposit the amount in Birr to Banks. This means a trader, who requests for $100, 000 should deposit the money in Birr that is equivalent to the dollar requested. According to a businessman ESAT talked to, the government applied the new practice because it has face financial crisis. “If traders lodge the Birr in the banks and the banks fail to give us the dollars on time or at all, who would be responsible?” the trader asks. The businessman says the distrust between the government and the business community has worsened.
“I would not be surprised if the Regime falls short of finance. Imagine the expenditures since the late Prime Minister, Meles Zenawi’s death such as the over one hundred million birr spent for his funeral, 250 million birr to mark the “Nations and Nationalities Day”, similar amount for “Defense Week”, “EPRDF’s 9th Congress” and now to mark the second anniversary of the start of the construction of the Grand Renaissance Dam, explain where the money was constantly being drained off.” He added. The ruling Front in its 9th Congress last week, admitted that it was faced with financial problems
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