Foreign exchange earnings retention right in Ethiopia

(Reference:  Retention and Utilization of Export Earning and Inward Remittance directive FXD/84/2023)

Foreign exchange earnings retention in Ethiopia

A bank is authorized to open foreign exchange retention accounts for eligible exporters of goods, services and inward remittances.

Exporter Retention Right

– Banks are required to surrender Fifty percent (50%) of receipts from export of goods and services, and exporter of goods and services shall have the right to retain Forty percent (40%) of their export earnings Whereas the remaining Ten percent (10%) shall be surrendered to the respective bank at the prevailing buying exchange rate immediately on the day of the receipt and the bank effect the payment of the equivalent Birr to an eligible customer.

Remittances Receiver Retention Right

– Banks are required to surrender Seventy percent (70%) from private transfers (remittance) and NGO’s transfers to the National bank of Ethiopia.

– Recipients of inward remittance shall have a right to retain Twenty percent (20%) in foreign currency transfer indeterminately in a retention account, whereas the remaining Ten percent (10%) shall be surrendered to the respective bank at the prevailing buying exchange rate immediately on the day of the receipt and the bank effect the payment of the equivalent Birr to an eligible customer.

Utilization of Foreign Exchange Retention Accounts

– Foreign currency held in a retention account shall be used for import of goods and services payment without restriction provided that the account holder has the required business license to do so.

– The retention account holder is free to sell all or part of the foreign currency held in the retention account at any time at freely negotiating rate not exceeding the selling exchange rate of the day to their respective client bank.

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