Fineline-Bankers, in private or state owned banks

Despite what any of the bankers, in private or state owned banks, may say about the state of the foreign exchange stock, the reality appears to have caught up with the Ethiopian authorities through the economic jurisdiction, gossip disclosed. Such is contrary to the official line of narrative, dictated upon bankers by the mighty central bank chiefs. Some of the bankers are witty; they argue that there is no fall in the stock, but rather there was a sudden surge in demand, and it could not keep up with what was available, gossip observed.

No such claim – bordering on humour, compounded by cynicism – was tolerated last week, during an export committee meeting, by a high level panel of ministers and bankers, chaired by Prime Minister Hailemariam Desalegn, gossip disclosed. It is in this committee that two high ranking officials find themselves in opposition to each others’ presence, gossip disclosed.

Teklewold Atnafu, the longest serving governor of the Central Bank, whose name alone sends shivers down the spines of many bank presidents, is adamant on a narrative that there is no shortage of foreign exchange. Yet, Dollar value, in the parallel market, is threatening to shoot to an unprecedented 20 Br high, claims gossip.

This is largely driven by the ballooning trade deficit, which Ethiopia has with its major trading partners – with China as the cheerleader. Ethiopia’s trade balance shows a deficit of 8.56 billion dollars, with the nation’s revenues generated from exports at 2.74 billion dollars – unable to pay for its growing imports. It grew in 2012, from the previous year, by 37pc, as opposed to exports that grew by half the value of imports.

These are statistics that nearly blew the mind of Mekonnen Manyazewal, minister of Industry, also lead author of the country’s Growth & Transformation Plan (GTP). Quiet and softly spoken, he is the lone man in the power corridor without party backing. Ironically, he stood up to the wrath of the governor who is a central committee member of the South Ethiopia Peoples Democratic Movement (SEPDM), one of the four coalition members of the ruling EPRDF, and where Hailemariam hails from, claims gossip.

Another non-party member, who braved the governor, is Bekalu Zeleke, the youngest ever president of the state owned Commercial Bank of Ethiopia (CBE), claims gossip. During last week’s export committee meeting, Bekalu collided with the most feared governor, thus openly challenging the latter’s report that he made available foreign currency worth 100 million dollars to finance imports, gossip disclosed. He blamed bankers for inattentive allocation, claims gossip.

It was an awkward moment, for Hailemarim to see two of his senior officials in the financial industry lock themselves up in a topsy-turvy battle, claims gossip. This would have been an unthinkable situation during the reign of his predecessor, gossip observed.

Despite insistence from his political ally in the national party, Hailemariam put a stop to the open feud, advising them both that the dispute would be addressed at another platform, and urged them, rather, to focus on bringing solutions to the crises at hand, gossip disclosed.

The crisis is swelling by the day, many in the business and industrial sectors claim. Factories are on the verge of closing, and indeed there are a few, which already have done so, due to their inability to open letters of credit, claims gossip. Neither is sourcing foreign currency and closing the gap in current account deficit that easy, according to gossip.

One source of the nation’s foreign exchange stock is loans and grants from development partners in the west and east. Yet, both are embroiled in their own domestic plights to survive the recession and spiralling unemployment figures, and desperately need to stimulate growth through promoting increased domestic consumptions. It is the wrong time for them, not only to make resources available, but also to pay attention to less fortunate countries, gossip observed.

Trying to get foreign exchange from multilateral financial institutions takes time.  Also, it is the same with regards to the government’s desire to boost revenues from exported items, according to gossip. Somebody has to act as fast and as swiftly as possible.

Act Hailemariam did, gossip disclosed. He ordered the Central Bank to sell some of its gold reserves in the international market, where an ounce of gold is priced at 1,669 dollars, gossip said. The Central Bank had gold in its reserves worth 1.37 billion dollars, in 2011/12. How much of this reserve would be available to sell was not decided at the export committee meeting, gossip disclosed. Officials at the Central Bank were ordered to table a proposal on that soon, says gossip.

Such is not a decision in panacea, however, according to gossip. Doing so has its own negative consequences on the value of the Birr against the basket of major currencies, and puts inflationary pressures on the economy, those at the gossip corridor foresee.

Published on Feb 03, 2013 [ Vol 13 ,No 666]



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