Revenue from remittance in Ethiopia showed an increase in the second half of the fiscal year out performing earnings from exports according to the National Bank of Ethiopia.
Private transfers of remittance totaled 1.74 billion dollars in the last seven months of the financial year which is a 19.6% increase from the same period in the last financial year explained Teklewold Atnafu, Governor of the National bank in a report presented to the House of Peoples Representatives.
The lower than expected export earnings, and 140 million US dollars less than revenue from remittance, has had a negative effect on the trade of balance with increase in imports and rising inflation.National imports have increased by 27.6% which is 20.1% less than the growth seen in the export sector resulting in a deficit of about 4.5 billion US dollars which further widens the trade imbalance noted the report prepared by the central bank.
The trade deficit for the same period last year was just 3.4 billion birr explained Teklewold in his report.
The increase in remittance also has had negative consequences on the economy exacerbating inflation as dollars are being exchanged for birr increasing the birr released into the market according to experts.
In the absence of counter measures an increase in remittance will translate into an increase of the money supply ultimately increasing the cost of living noted the experts.
The governor of the bank admitted to the continuing challenge of inflation but pointed to five continuous months of seemingly slowing prices as a potential indication of the effectiveness of some of the measures taken by the bank to curb inflation.