Ethiopian Legal Brief

Directives No. 67/2020 Directive for Amendment of Retention and Utilization of   Export Earnings And Inward Remittances Directives No. FXD /48 /2017

NATIONAL BANK OF ETHIOPIA

   Directives No. 67/2020 Directive for Amendment of Retention and Utilization of   Export Earnings And Inward Remittances Directives No. FXD /48 /2017

Whereas, it is necessary to reconsider and incentivize eligible exporter of goods and services in line with power and responsibility vested in the National Bank of Ethiopia(NBE);

Now, therefore, in accordance with Article 27 (2) of the National Bank of Ethiopia establishment as amended Proclamation No. 591/2008, these Directives are hereby issued as follows:

Article 1        Short Title

These Directives may be cited as “The Retention and Utilization of Export Earnings and Inward Remittances Directives No.”67/2020″.

Article 2     Definitions

For the purpose of these Directives, unless the context requires otherwise:

  1. “Forex Retention Accounts” shall mean foreign currency accounts maintained by eligible exporters of goods and services and recipients of inward remittances in accordance with the provisions of these Directives.
  2. “Delinquent list” is a list containing names of exporters who have not settled their foreign exchange commitments with NBE.
  3. “Eligible Customer” shall mean a regular recipient of foreign exchange remittances from abroad and/or an exporter of goods or services whose name does not appear on the delinquent list.
  4. “Recipient of Inward Remittances” shall mean a resident company, institution or individual, government organizations, other than a diplomatic mission, who receives foreign exchange transfers from abroad.
  5. “Eligible Exporter of Goods and Services” shall mean an exporter who has fully settled his/her foreign exchange commitments with the NBE and whose name does not appear on the delinquent list.
Article 3       Opening of Forex Retention Accounts

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

Article 4       Types of Foreign Exchange Retention Accounts
  1. Eligible customers may open two types of foreign exchange retention accounts (current accounts), which shall be designated as “Foreign Exchange Retention Account A”, and “Foreign Exchange Retention Account B”.
  2. Such accounts shall only be credited from export of goods and services and incoming transfer made for inward remittance recipients.
Article 5       Retention Rights
a) Account A: Thirty percent (30%)of the account balances for an indefinite period of time.
b) Account B:  Seventy percent (70%) of the account balances for up to 28 days. After the 28 days, any balance shall automatically be converted in the next working day into local currency by the customer’s bank using the prevailing buying exchange rate.

 

Article 6 Utilization of Foreign Exchange Retention Accounts
  1. import of goods, except vehicles, and related services in relation to a business including:
    1. payment for expenses incurred on exporting of goods and services;
    2. payment for promotional activities such as advertising and marketing expenses;
  1. payment for services rendered by non-residents against evidence that payment is contractually due;
  2. payment for training fee and educational expenses;
  3. payment to import materials required for export packing, labeling and auxiliary items;
  1. payment for settlement of external loans and suppliers credit;
  2. payment to refund tour operators, wild-life hunting’s, excursion programme booked if cancelled for various reason;
  3. payment to pay out contributions to International conference Centers and workshop participation expenses;
  4. to pay service payments for consultants, experts or professional who rendered services;

 

  1. payment to refund to their clients the unused parts on the foreign currency transferred, cover for short shipments, weight loss or defective items;

 

  1. Other payments against transactions that might be approved by the NBE from time to time.

 

 

  1. Retention account “B”: At any time up to 28 days from the date of credit at freely negotiating rate not exceeding the selling exchange rate of the day.
Article 7Submission of Report

 

  1. Authorized banks operating foreign exchange retention accounts shall send to NBE the aggregate balances of foreign exchange held under retention account “A” and “B” on monthly basis.
  2. Authorized banks are required to identify the foreign currency retention account number and type, on permits and tickets issued in case of utilizing the fund for purposes listed under article 6.
Article 8Penalty

Any person who fails to comply with the provisions of this directive shall be punished  in accordance with Article 26 of the National Bank of Ethiopia Establishment (as Amended) Proclamation No. 591/2008.

Article 9Repeal

Retention and utilization of Export Earnings and Inward Remittances Directives No. FXD  /48/2017  is repealed and replaced by these Directives.

Article 10Effective Date

This Directives shall enter into force as of the September   , 2020.

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