The latest CEPHEUS’s macroeconomic handbook has revealed that Ethiopia’s gross forex inflows had reached $21.5bn last fiscal year – with a 10 percent improvement from the prior year but essentially back to their levels seen two years ago.
The new CEPHEUS report titled ‘Ethiopia Macroeconomic Handbook 2022’ states that the limited availability of foreign exchange supplies remains of the main macroeconomic and business bottlenecks in Ethiopia and little progress has been recorded in this area in recent years.
Here, we highlighted the report insights on foreign exchange performance indicators of Ethiopia in 2020/21 fiscal year.
Last fiscal year, Ethiopia’s gross foreign exchange inflows totaled $21.5 billion, a slight increase over the previous year but still lower than levels seen two years ago.
This total forex inflow figure includes:
- Goods exports: $3.6 billion
- Service exports: $4.9 billion
- Remittances: $5.2 billion
- Other private transfers: $1.2 billion
- Official grants: $1.2 billion
- External borrowing: $1.4 billion
- Foreign Direct Investment (FDI): $3.9 billion
According to the report, Aid-related forex flows of grants and loans fell by one-third in 2020/21. And, contrary to the common perception, the biggest sources of forex inflows in recent years have not been goods exports but rather items such as service exports, remittances, and FDI – more than made up the difference.
On the outflows side, the biggest uses of foreign exchange are goods imports amounting $14.3bn, service imports worth $4.3bn, and repayments on foreign debt of $1.8bn.
Besides the large annual $14bn import bill faced in recent years, the largest source of forex outflows reflects large repayments on the accumulated foreign debt. In the last fiscal year, the report noted that debt service repayments of $1.8bn were effected (principal and interest), against new foreign loans of just $1.4bn, implying a net negative transfer $0.4bn in loan-related financial flows from Ethiopia to the rest of the world.
The report disclosed, the net forex position of the banking system has declined since the start of the current fiscal year, and a temporary drop in the NBE’s forex reserve holdings—to just under $2bn—is thus to be expected by June 2022.
Source: CEPHEUS
DISCLAIMER
The opinions expresses here in the post "Ethiopia Forex Inflows Reached $21.5 billion in 2020/21: A Consistent Performance with Previous Years" are those of the individua's contributor(s) and do not necessarily reflect the views of Business Info Ethiopia , BIE Intelligence PLC, its publisher, editor, or any of its other contributors.
