Eritrea imposes new currency regulations

ASMARA, Jan 26 (AFP) — Eritrea has introduced new financial controls requiring that all transactions in the country be conducted in the national currency, the nakfa, a senior official said Wednesday.

The new regulations, which took effect earlier this month, are intended to “boost the country’s economy,” Eritrean Information Minister Ali Abdu told AFP.

Under the new rules, unless a specific exemption is granted, all monetary transactions in Eritrea must now be paid by nakfa and foreign currencies must be exchanged at the national bank at the official rate.

“Unless the Bank of Eritrea specially authorizes receipt in foreign currency, all transactions in Eritrea shall be settled in nakfa,” the text of the regulation says.

Previously many private transactions, particularly rent payments, were handled in foreign currency, usually dollars.

While the official exchange rate is now 15 nakfa to the dollar, business groups have complained that the currency is still overvalued.

In addition, the new regulations require all travelers arriving in Eritrea to declare in writing how much foreign currency he or she is bringing into the country.

The new rules “will create a favourable environment for institutions and businesses,” Ali Abdu told AFP by telephone.

A diplomatic souce in Asmara said the regulations were intended “to provide more foreign currency for the Eritrean government which has to pay back some World Bank loans.”