AmendmentTrade

Directive for Amendment of Retention and Utilization of Export Earnings and Inward Remittances (Directive No. 828/2021)

National Bank Of Ethiopia828/2021

Summary

This directive amends previous regulations on the retention and utilization of export earnings and inward remittances, outlining new rules for foreign exchange retention accounts, surrender requirements, and account utilization for eligible exporters and remittance recipients.

Who's affected

Eligible exporters of goods and services and recipients of inward remittances, as well as banks operating foreign exchange retention accounts.

Action required

Banks must ensure compliance with the new retention and surrender percentages, reporting requirements, and penalty clauses. Eligible customers should be aware of their rights regarding retention account balances and utilization.

Key points

5
  • Amends Directive No. 785/2021.
  • Establishes retention of 40% and surrender of 50% of export earnings.
  • Specifies conditions for opening and utilizing Forex Retention Accounts.
    • Show 2 more
    • Outlines reporting requirements for banks.
    • Imposes penalties for non-compliance by banks.

Requirements

6
  • Banks must surrender 50% of foreign currency earnings from exports, private transfers, and NGO transfers to the National Bank of Ethiopia.
  • Eligible exporters and remittance recipients can retain 40% of export earnings in foreign currency in a retention account.
  • The remaining 10% must be surrendered to the respective bank at the prevailing buying exchange rate.
    • Show 3 more
    • Banks can credit funds to retention accounts only with written authorization from the recipient.
    • Banks must send aggregate balances of foreign exchange held under retention accounts to the NBE on a monthly basis.
    • Banks must identify the foreign currency retention account number on permits and tickets issued when utilizing funds.

Rights and permissions

3
  • Eligible exporters of goods and services and recipients of inward remittances have the right to retain 40% of their export earnings in foreign currency.
  • Account holders can use foreign currency in their retention account for import of goods and services payments without restriction, provided they have the required business license.
  • Account holders can sell all or part of the foreign currency in their retention account at any time at a freely negotiated rate not exceeding the selling exchange rate of the day to their respective client bank.

Restrictions

4
  • Banks are required to surrender 50% of foreign currency earnings.
  • The remaining 10% of earnings must be surrendered to the bank.
  • Funds can be credited to retention accounts only upon written authority from the recipient.
    • Show 1 more
    • Utilization of retention account funds for imports requires the account holder to have the necessary business license.

Penalties

1
  • Any bank violating the directive provisions is subject to a penalty of USD 5000 for each violation.

Objectives

2
  • To reconsider and incentivize eligible exporters of goods and services and recipients of inward remittance.
  • To provide clear guidelines on the opening, retention, utilization, and reporting of foreign exchange retention accounts.

Organizations

1
  • National Bank of Ethiopia (NBE)

Legal references

2
  • Article 27 (2) of the National Bank of Ethiopia establishment as amended Proclamation No. 591/2008
  • Retention and utilization of Export Earnings and Inward Remittances Directives No. 785/2021
Original sourcehttps://justice.gov.et/en/directives/directive-for-amendment-of-retention-and-utilization-of-export-earnings-and-inward-remittances-directive-no-828-2021/
View source