The Regulation of Foreign Currency under International Financial Law and its Relevance in Ethiopia
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Date
2023-07
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Addis Ababa University
Abstract
Foreign exchange restrictions are highly condemned by the international financial regime
instituted by the International Monetary Fund (IMF). Member countries of the IMF are expected
to uphold this obligation. Failure to adhere to this obligation may entail consequences from the
IMF, individual countries, and other international actors. Ethiopia, as a member of the IMF, is a
beneficiary of different arrangements by the IMF that stimulates the country’s economy positively.
However, measures against the IMF’s Articles of Agreement are maintained and regularly
introduced by “the National Bank of Ethiopia (the NBE).” Ethiopia claims that the measures to
restrict foreign exchange emanate from balance of payment reasons and other social and economic
goals. Overall, Ethiopia seems far behind in liberalizing the foreign exchange regime while the
whole world is harmonizing with the IMF into an integrated foreign exchange scheme. This study
assesses the different restrictions introduced by the NBE. It also shows how these measures do not
conform with Ethiopia’s international obligations and provide insight as to why reform in
Ethiopia’s forex regime is very much needed.
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Keywords
Financial Regulation, Foreign Currency, Foreign Exchange, the National Bank of Ethiopia, the International Monetary Fund, Ethiopia