To the utter shock and disbelief of many of those in the private sector and their counterparts in the nation`s banks, central bank Governor, Teklewold Atnafu, made a statement last week, which, on the surface, appeared bizarre, gossip observed. Many of these businesspeople, who rather believe their daily ordeal with the endless wait for approval of their forex applications, find the governor`s claim that there is hardly any issue with the country`s forex reserve, perplexing, according to gossip.
Gossip finds it close to impossible to find a company with a need for foreign exchange that is not complaining about the unavailability of forex in the financial system. The wait is so long, sometimes whatever amount is obtained is too late to make much difference. Some of the private banks have reached a stage where they are unable to honour their commitments. And suppliers have come all the way to Addis to lodge their complaints before the Governor.
Neither is the process of repatriation any easier for foreign companies which provide services to state-owned entities here. For instance, a French telecoms firm waiting to repatriate a little over two million euro has waited for close to four months, gossip disclosed. Nor is footing the country`s bill for the import of commodities as crucial as fuel, with those in charge of the petroleum enterprise stressed by the outstanding bill of close to 200 million dollars, gossip revealed.
Not surprisingly, Ethiopia`s woes in its foreign exchange reserve, comes as a result of deeply structural problems in its trade balance. It simply is a country with a budget bloated to finance a series of massive public infrastructure projects, all within a short span of time. The funds to pay for the imports of capital goods come from a limited number of sources, mainly export revenues, remittances and loans as well as grants. The foreign exchange reserve generated from all these rather traditional sources barely covers half the amount needed to pay for imports in any given year.
The administration of Prime Minister Hailemariam Desalegn has been desperate in its search for non-traditional sources of foreign exchange lately. Getting to the international capital market to access borrowing through sovereign bond was one source. It succeeded in getting one billion dollars from eurobond. Yet, gossip observed a political hit the administration received from within the ruling party, which has made this route to forex an inconvenient road to take, at least for the coming couple
of years, gossip disclosed.
Considering all this, the Governor may have been silver-tongued in addressing a rather dumfounded audience in the business circle on the fact that there should be little worry about the stock of the country`s forex reserve, gossip observed. But what sort of new development has made Teklewold brush aside a real problem and legitimate complaints on the ground, gossip wondered?
He might have found solace in the positive outcome of the series of back and forth visits by Hailemariam and his senior aides to Saudi Arabia; and a reciprocal visit from Saudi princes to Addis Abeba lately. This has culminated in a decision by the government of Saudi Arabia to deposit no less than one billion dollars – if not a little more, according to some claims -with an Ethiopian bank in a term deposit, gossip disclosed. Expected to be transferred in few weeks, this fund coming from a most untraditional direction, will no doubt offer the administration a great sigh of relief, according to gossip.
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