The devoted person, without being questioned, refunded the 500,000 birrs that was inadvertently deposited into the account. Similarly, the ratio of imports to GDP declined sharply when we ran out of foreign currency to import. In 1996, the Forex reserve hit a record high and covered seven months. This means that we can continue importing even if we don’t produce any fresh foreign currency over those seven months.
Only two months’ worth of import expenses were met by the reserve in 2020. It probably dipped below one month in 2021 and 2022, despite the fact that I don’t have any hard statistics. Official development assistance (ODA) has dropped since 2015. From three percent of the GDP to around 0.5 percent, remittances have fallen. As we devalue, our foreign exchange reserves are further damaged.
Imports as a percentage of GDP decreased from 4% in 2011 to 17% in 2020. Because we don’t have enough foreign currency to import, all imported goods increase in price on the domestic market. Ethiopia is one of the ten countries with the lowest imports. One factor is Ethiopia’s import tax, which is among the ten highest in all of Africa. Ethiopia’s average import charge is 12.2 percent, but the average import tariff for all of Africa is only 1.6 percent.