Ethiopian Ministry of Finance Issues Circular Amending Foreign Currency Approvals

Tibebe Zewdu

The Ethiopian Ministry of Finance (MoF) has recently issued a Circular on 07 March 2024 (28 Yekatit 2016 E.C) amending the previous Circular it issued back on 14 October 2022 (04 Tikemt 2015 E.C) to restrict foreign currency approvals to the importation of a list of 38 items. This new amendment by the MoF is quite useful as it repeals all the communications that were previously issued, notably by the Ethiopian Customs Commission (ECC), on multiple occasions which created confusion. The amendment also clarifies important elements from the original Circular.

This amendment holds considerable significance as it not only adjusts the previous Circular but also repeals all prior communications, notably those issued by the Ethiopian Customs Commission (ECC) on multiple occasions. These communications had resulted in significant confusion and ambiguity within the importation landscape, leading to challenges in compliance and interpretation.

The original MoF Circular, issued on 14 October 2022, aimed to restrict foreign currency approvals for the importation of various goods, including vehicles (under Tariff Heading 8703). However, it notably omitted any mention of franco-valuta importation (i.e. importation without foreign currency approvals). Subsequently, the ECC extended the scope of this Circular through various correspondences, ultimately prohibiting the importation of listed items even on a franco-valuta basis.

The ECC’s multiple clarifications, issued on 19 October 2022 (09 Tikemt 2015 E.C) and 17 August 2023 (11 Nehase 2015 E.C), created significant uncertainty and complexity within the importation process. Moreover, the ECC’s interpretation seemingly exceeded its authority, leading to undue restrictions on franco-valuta importations, even where the law permitted it and it was not explicitly prohibited under the original MoF Circular.

The latest amendment by the MoF aims to streamline and clarify these regulations, providing much-needed clarity to importers and stakeholders. Among other issues, the amended Circular explicitly states that the initial prohibition on foreign currency approvals does not extend to items imported on a franco-valuta basis, provided they comply with applicable laws and regulations.

This clarification is particularly pertinent for non-profit organizations permitted to import items, including vehicles, from abroad as gifts or donations solely for their use and not for commercial purposes. The previous ECC communications had unduly restricted such imports, creating unnecessary hurdles for non-profit institutions engaged in humanitarian and developmental activities.

It’s essential to highlight that while the latest MoF Circular addresses franco-valuta importations, the types of vehicles eligible for duty-free importation are governed by a separate directive issued by the Ministry of Finance. Our team at TBeST Law LLP is available to provide comprehensive legal guidance and support regarding importation regulations and other legal matters.

This update is meant to inform and provide general insight into recent regulatory changes and should not be construed as legal advice. It’s always essential to seek legal advice tailored to your specific circumstances.