’Step-by-Step, Optimal for Forex Liberalization, latest Addis Chamber report unveils,

Shortage of foreign currency has long been one of the sustained challenges facing Ethiopian businesses.

However there is an optimism to curb the ensuing challenge as part of the government decision to open up the financial sector for international markets.

This has been highlighted at the recent validation workshop hosted by Addis Chamber that also tries to explore possible scenarios and policy implications.

Accordingly, that liberalization the long-time controlled forex regulation is a delicate business and needs systematic and careful approach, says Melaku Tanku, one of the resource person on the issue.

He however believes that there is an acute shortage of foreign currency reserve emerging for so long.

Weak controlling system, illegal circulation and capital flight are the root causes of the foreign crises in the country.

Opening forex regulation is precedes both risk and opportunities,  Melaku said during the panel.

Countries like Uganda, Ghana, China and South Korea have sustained financial sector stability.

Countries like Nigeria, Russia and Uzbekistan sustaining shocks for a while.

Floating forex regulation may ensure to boost export and import activities, narrow trade balance and control inflation, he further remarks.

Therefore the movement has taken a gradual approach  and put in place all the necessary infrastructural  and legal frameworks in place to avoid possible further crises.

The government has to devise a short, medium and long term policy actions , suggests the speaker.

Eyasu Kumera, a co-researcher said , over the last 10 years, the National Bank of Ethiopia has made about 29 directives in relation to forex regulations however the forex crunch still persists.

The fact is that the demand for foreign currency is still growing and the gap between the official and parallel exchange is widening, Eyasu said. Since 2018/9 the exchange rate has reached about 68% against the local currency -the Birr.

Curbing inflation, diversify and boost export control the parallel markets, strengthen the National Bank of Ethiopia, strongly engage in stabilizing the macro-economic conditions and widely participate the private sector in the national economic growth are some of the recommendations of the experts for policy measures by the government.

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