AmendmentTrade

Directive for Amendment of Retention and Utilization of Export Earnings and Inward Remittances (Directive No. 875/2022)

National Bank Of Ethiopia875/2022

Summary

This directive amends the retention and utilization of export earnings and inward remittances, allowing eligible exporters and remittance recipients to retain a portion of their foreign currency earnings in special accounts for import payments or sale.

Who's affected

Exporters of goods and services, recipients of inward remittances, and banks operating foreign exchange retention accounts.

Action required

Banks must comply with new retention and surrender requirements for foreign currency earnings and report balances to the National Bank of Ethiopia. Eligible exporters and remittance recipients should ensure their accounts are properly managed for utilization or sale of retained funds.

Key points

5
  • Amends Directive No. 828/2021.
  • Allows retention of 20% of export earnings and inward remittances.
  • Retained funds can be used for imports or sold to banks.
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    • Banks must surrender 70% of foreign currency earnings.
    • Penalties apply for bank violations.

Requirements

6
  • Banks must surrender 70% of foreign currency earnings from exports, private transfers, and NGO transfers to the National Bank of Ethiopia.
  • Exporters and remittance recipients can retain 20% of export earnings indefinitely in a retention account.
  • The remaining 10% must be surrendered to the respective bank at the prevailing buying exchange rate.
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    • Banks must obtain written authority from the recipient to credit funds in retention accounts.
    • Banks must identify the foreign currency retention account number on permits and tickets when funds are utilized.
    • Banks operating retention accounts must send aggregate balances to NBE on a monthly basis.

Rights and permissions

3
  • Eligible exporters and remittance recipients have the right to retain 20% of their export earnings in foreign currency in a retention account.
  • Account holders can use foreign currency in retention accounts for import of goods and services payments without restriction if they have the required business license.
  • Account holders can sell all or part of the foreign currency in the 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 70% of foreign currency earnings to the National Bank of Ethiopia.
  • Only 10% of earnings must be surrendered to the respective bank at the prevailing buying exchange rate.
  • Funds in retention accounts can only be credited upon written authority from the recipient.
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    • Utilization of funds for purposes listed under article 5 requires identification of the retention account number on permits and tickets.

Penalties

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

Objectives

3
  • To reconsider and incentivize eligible exporters of goods and services and recipients of inward remittance.
  • To allow eligible customers to retain a portion of their foreign exchange earnings.
  • To provide guidelines for the utilization and sale of funds held in 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. 828/2021 (repealed)
Original sourcehttps://justice.gov.et/en/directives/directive-for-amendment-of-retention-and-utilization-of-export-earnings-and-inward-remittances-directive-no-875-2022/
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