Gov’t pulls plug on Franco Valuta imports; sets two-week deadline to finalize ongoing transactions

Addis Abeba – The Ethiopian government has officially banned the importation of goods using Franco Valuta, effective immediately.

A letter signed by Finance Minister Ahmed Shede on November 7, 2024, outlines that importers have a two-week grace period to finalize their ongoing transactions through Franco Valuta.

The letter explains that the temporary allowance for imports through Franco Valuta was intended to support macroeconomic reforms and mitigate potential challenges during the transition period. The policy covered essential goods such as cooking oil, consumer products, and raw materials for industries.

The government emphasized that this measure helped to curb inflation, which could have been exacerbated without access to Franco Valuta for imports.

The letter also confirmed that commercial banks will now supply foreign currency to importers, marking the end of Franco Valuta imports.

The government’s decision to ban the importation of goods using Franco Valuta follows Prime Minister Abiy Ahmed’s recent indication that adjustments to the policy were imminent.

During his recent parliamentary address, the Prime Minister outlined two primary motivations for the initial decision to permit Franco Valuta imports:

“Firstly, to facilitate the repatriation of foreign currency that had previously exited the country,” he explained. “Secondly, to ensure the continued flow of essential goods, even as the economy faced potential inflationary pressures and challenges for commercial banks still adapting to the ongoing economic liberalization reforms.”

Prime Minister Abiy underscored the unsustainable nature of the current Franco-Valuta system, emphasizing the need for immediate changes.

In September 2024, the Ministry of Finance relaxed restrictions on Franco Valuta imports, expanding the range of permissible goods as part of the government’s broader macroeconomic reform agenda, initiated in late July 2024. AS