Political sketch
Independent from Ethiopia on 24 May 1993.
From the 1700s to the 1900s, control of Eritrea was disputed among Ethiopia, the Ottoman Empire, and later Italy. Italian settlement began in Assab in 1869 and, on a larger scale, in Massawa in 1885; Italy also purchased the Red Sea port of Aseb from a local ruler. Italy interpreted a treaty of 1889 with Ethiopia as giving it a protectorate over Eritrea, a claim rejected by the Ethiopian emperor but supported by the British government. Eritrea (named by the Italians from the Latin erythreum, meaning red, for its location on the Red Sea) was created on 1 January 1890. Italy used Eritrea as the main base for an unsuccessful invasion of Ethiopia in 1896 and the conquest of Ethiopia in 1935. In 1941, during the Second World War, British troops defeated the Italian army in Ethiopia, Somalia, and Eritrea. Eritrea was under British administration until becoming part of a federation with Ethiopia on 15 September 1952. Ethiopia undermined Eritrea's separate status, and on 14 November 1962 the Ethiopian emperor Haile Selassie dissolved the federation and Ethiopia absorbed Eritrea, contrary to the wishes of most Eritreans. A long guerilla war against the Ethiopian government began in earnest; it continued after a military coup of September 1974 replaced Haile Selassie with a Marxist regime equally opposed to Eritrean independence. In early 1991, guerilla groups from Eritrea and other regions opposed to the central government overthrew the Ethiopian regime. The Eritrean People's Liberation Front formed a provisional government for Eritrea.
After a referendum indicated overwhelming support among Eritreans for independence, the provisional government declared independence on 24 Mary 1993. Eritrea began its existence as a very poor country, and its economic development was not helped by a costly war with Ethiopia from 1998 to 2000 over minor unresolved problems of demarcating the border. The first president, Isaias Afwerke, remains in power today (2005). In September 2001 the government arrested prominent critics who called for elections and greater democracy.
Wars since 1500
Ethiopian-Egyptian War of 1875-1877; Italo-Ethiopian War of 1887-1889; Italo-Ethiopian War of 1895-1896; Italo-Ethiopian War of 1935-1936; Second World War in East Africa, 1940-1941 (Italy against United Kingdom); Ethiopian-Eritrean Guerilla War, 1961-1991; Ethiopian-Eritrean Border War, 1998-2000.
Convertibility
Eritrea began applying Ethiopian exchange controls on 15 September 1952 when the two countries federated. Their exchange controls began to become separate sometime in the period 24 May 1993-1994, after Eritrea achieved independence. Eritrea supposedly removed all exchange controls 15 August 2001 (Eritrea, Legal Notice No. 49/2001), and volumes of the IMF's Annual Report on Exchange Arrangements and Exchange Restrictions list it as having had a unified exchange rate for some time. However, IMF staff country report 03/165 on Eritrea, issued in June 2003, says Eritrea has had a dual rate since 1998 (p.17). There is a single official rate, but it differs by as much as 60% from the parallel market rate. The shortage of foreign exchange at the official rate has been such that at times even the government itself has bought foreign exchange in the parallel market.
Other
Defaults on or restructurings of debt to the private sector (mainly from Purcell and Kaufman 1993 and Standard & Poor's 2004): 1991-1999 (foreign currency bank debt).
Banking crises (data since 1970s mainly from Caprio and Klingebiel 1999 and Frydl 1999): In Eritrea's small banking system before the Second World War, the Banca per l'Africa Orientale failed in 1923, the cooperative bank Banca Cooperative Popolare Eritrea was liqudated in 1933, and the Banco Coloniale di Credito was liquiated in 1932 (Mauri 2003: 16-17). Most of banking system was insolvent in 1993-1994.
No exchange rate data in Reinhart and Rogoff (2003).
References
Primary sources:
--Laws and decrees:
Eritea. Gazette. 1892-1935. Bollettino ufficiale della colonia eritrea (1892-1933); Bollettino ufficiale del governo dell'Eritrea (1933-1935). Massawa (1892-1933); Asmara (1933-1935): Tip. Nazionale (1892-1933); Tip. Ditta Fioretti (1933-1935). (Apparently independent Eritrea has no gazette.)
Ethiopia. Gazette. 1942-present. Negarit gazeta; English title Negarit Gazeta of the Empire of Ethiopia (1942-1974); Negarit Gazeta of the People's Democratic Republic of Ethiopia (1974-1991); Negarit Gazeta of the Transitional Government of Ethiopia (1991-1994); Federal Negarit Gazeta of the Federal Democratic Republic of Ethiopia (1994-present). Addis Ababa: Berhanena Selam Printing Press (1942-1994); Printing Press (1994-present).
Great Britain (United Kingdom). Gazette. 1665-present. Oxford Gazette (1996-1666); London Gazette (1666-present). Oxford (1665-1666); London (1666-present): His/Her Majesty's Stationery Office from 1903. Online at <http://www.gazettes.online.co.uk>; as of September 2005, gazettes since 1900 are available.
Italian East Africa. Gazette. 1935-1941. Giornale ufficiale dell governo general dell'Africa orientale italiana e bollettino ufficiale del governo della Scioa. Addis Ababa.
Italy. Gazette. 1860-present. Gazzetta ufficiale del Regno (1860-1861); Gazetta ufficiale del Regno d'Italia (1861-1946); Gazzetta ufficiale della Repubblica italiana (1946-present). Turin and Florence (1860-1923); Rome (1923-present): Tip. Favale (1860-1923?); Provvidetitorato Generale dello Stato, Ministero delle Finanze (1923-1928); Istituto Poligrafico dello Statio (1928-1978); Istituto Poligrafico e Zecca dello Stato (1978-present). Online at <http://www.gazzettaufficiale.it>.
--Publications of monetary authorities:
Banca d'Italia. Annual report. 1895-present. Adunanza generale ordinaria e straordinaria degli azionisti ... (1895-1935); Adunanza generale ordinaria dei partecipanti ... (1936-1950); Assemblea generale ordinaria dei partecipanti ... (1951-present). Rome: Tipografia della Banca d'Italia (1895-1950); Banca d'Italia, Centro Stampa (1951-present). An abridged English version is available from at least 1933 (Abridged Translation of the Report of the Governor at the Annual General Meeting of the Shareholders Held in Rome on the ... [1933-1939]; no English version 1940-1951; Abridged Version of the Report for the Year ... Presented at the Ordinary General Meeting of Shareholders Held in Rome on ... [1952-1964]; Abridged Version of the Report for the Year ... Presented by the Governor at the Ordinary General Meeting of Shareholders Held in Rome on ... [1965-1983]; Ordinary General Meeting of Shareholders Held in Rome on ...; Abridged Report for the Year ... [1984-present]).
Bank of Eritrea (National Bank of Eritrea). Annual report. 1997-present. The central bank does not seem to have issued any annual reports yet (as of 2005).
East African Currency Board. Annual report. 1920/1921-1971/1972. Report of the East African Currency Board for the Year ending 30th June... (1920/1921-1959); Report for the Year Ended 30th June ... (1961/1962-1970/1971); The Final Report of the East African Currency Board (1971/1972). London: Waterlow and Sons (1920/1921-1958/1959); Nairobi: Government Printer, Kenya (1959/1960-1964/1965), Printing and Packaging Corporation (1965/1966-1970/1971); East African Currency Board (1971/1972).
Ya'Ityopy Behérwi Bnk (National Bank of Ethiopia). Annual report. 1964-present. First [etc.] Annual Report (1964-1976); Annual Report (1977-1990/1991); Report and Account (1991/1992-2000/2001); Annual Report (2001/2002-present). Addis Ababa: National Bank of Ethiopia.
Ya'Ityopy Behérwi Bnk (National Bank of Ethiopia). Bulletin. 1964-present. Quarterly Bulletin. Addis Ababa: National Bank of Ethiopia.
Ya'Ityopy Mangest Bnk (State Bank of Ethiopia). Annual report. 1946-1963. Annual Report. Addis Ababa: State Bank of Ethiopia.
Ya'Ityopy Mangest Bnk (State Bank of Ethiopia). Bulletin. 1948-1963. Monthly Letter (1948-1950); Monthly Report on Economic Conditions and Market Trends (1950-1963). Addis Ababa: State Bank of Ethiopia.
--Web site of the current monetary authority (viewed 20 September 2005):
Apparently none.
--Other publications or Web sites:
None.
Main secondary sources:
Banca d'Italia. 1940. La Banca d'Italia nelle terre d'oltremare. Rome: Istituto Poligrafico dello Stato.
Barclays Bank (Dominion, Colonial and Overseas). 1948. A Bank in Battledress: Being the Story of Barclays Bank (Dominion, Colonial and Overseas) During the Second World War, 1939-1945. Cape Town: printed by Cape Times, Limited for private circulation. (Contains some information on the role of the bank as agent for British forces in the Horn of Africa during the Second World War.)
Gill, Denis. 1991. The Coinage of Ethiopia, Eritrea and Italian Somalia. Garden City, New York: Dennis Gill.
IMF. 2003a. International Monetary Fund. "Eritrea: 2003 Article IV Consultation--Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Eritrea." Country Report no. 03/165, June, <http://www.imf.org/external/pubs/ft/scr/2003/cr03165.pdf>.
IMF. 2003b. International Monetary Fund. "Eritrea: Selected Issues and Statistical Appendix." Country Report no. 03/166, June, <http://www.imf.org/external/pubs/ft/scr/2003/cr03166.pdf>.
IMF ARER. 1950-present. International Monetary Fund. Annual Report on Exchange Restrictions (1950-1978), Annual Report on Exchange Arrangements and Exchange Restrictions (1979-1988), Exchange Arrangements and Exchange Restrictions: Annual Report (1989-present). Washington: International Monetary Fund. (Contains information on IMF member countries and some of their dependencies.)
Mauri, Arnaldo. 2003b. "Eritrea's Early Stages in Monetary and Banking Development." Dipartimiento di Economia Politica e Aziendale, Università degli Studi di Milano, Working Paper No. 28.2003, October, <http://www.economia.unimi.it/pubb/wp171.pdf>, viewed 24 September 2005.
Mauri, Arnaldo, and Clara Caselli. 1986. Moneta e banca in Etiopia. Milan: Finafrica-Cassa di Risparmio delle Provincie Lombarde, Giuffrè Editore.
Pankhurst, Richart. 1968. Economic History of Ethiopia 1800-1935. Addis Ababa: Haile Selassie I University Press. (Eritrea was part of Ethiopia for part of the period the book covers.)
Rodd, [Baron] F[rancis] J[ames] Rennell [Lord Rennell of Rodd]. 1948. British Military Administration of Occupied Territories in Africa During the Years 1941-47. London: His Majesty's Stationery Office. (Concerns in particular Eritrea, Ethiopia, Libya, and Somalia.)
Tschoegl, Adrian. 2001. Maria Theresa's Thaler: A Case of International Money." Eastern Economic Journal, v. 27, no. 4, Fall: 443-62.
Tuccimei, Ercole. 1999. La Banca d'Italia in Africa: introduzione all'attività dell'Istituto di emissione delle colonie dall'età crispina alla seconda guerra mondiale. Rome: Laterza. (Concerns Italian colonies.) (I have not seen this.)
Monetary authorities: Eritrea
| Dates | Type | Name | Source | Remarks |
| 2 February 1914
-23 April 1941 |
dollarization | Italian lira (issued by central bank Banca d'Italia [headquarters Rome, Italy]) | Italy, decree of 29 January 1914, cited in Banca d'Italia (1940: 63) | Italian notes were sent to Eritrea as early as 1885 but circulated little. In 1913 Italian government 5-lire notes were put into circulation to alleviate a scarcity of currency (Mauri 2003b: 12). Technically, notes of the Banco di Napoli as well as the Banca d'Italia were eligible to circulate in Eritrea during the period the Banco di Napoli still issued notes, but Banca d'Italia notes seem to have predominated. The post office savings bank provided payment services from 1886, but the first commercial bank was the Banca d'Italia (headquarters Rome, Italy), in Asmara, at the start of this period. The Asmara office had autonomous capital. The second commercial bank was the Banca per l'Africa Orientale (headquarters Massawa, Eritrea), in April 1918 Mauri (2003b: 14-15), though a cooperative savings bank had opened in 1915 (Banca d'Italia 1940: 63). Silver Maria Theresa thaler coins were widely used from about 1790. Eritrea used Italian-issued local coins and Italian notes from 1890 (Pankhurst 1968: 479-80). The Banca d'Italia made special issues of lira notes for Italy's East African colonies |
| 24 April 1941
-30 April 1942 |
dollarization (another type) | East African shilling (issued by joint currency board East African Currency Board [headquarters London, England]) alongside Egyptian pound (issued by central bank National Bank of Egypt [headquarters Cairo, Egypt]) | United Kingdom, Occupied Enemy Territory Administration, Proclamation No. 1, 24 April 1941, cited in Mauri and Caselli (1986: 57) | Following the Allied capture of Eritrea from Italy during the Second World War, the British administration introduced the East African shilling, used in British East African colonies, and the Egyptian pound, used in the neighboring Anglo-Egyptian colony of Sudan. Italian currency was not demonetized until 1942. Barclays Bank (Dominion, Colonial and Overseas) acted as the agent for the British occupation forces, establishing a branch in Asmara in June 1941 (Mauri 2003b: 2). |
| 1 May 1942
-14 September 1952 |
dollarization (another type) | East African shilling (issued by joint currency board East African Currency Board [headquarters London, England]) | United Kingdom, Occupied Enemy Territory Administration, proclamations of early 1942, cited in Rennell Rodd (1948: 374) | The British occupation administration phased out the Egyptian pound. Eritrea did not share in the seigniorage paid by the currency board (first paid to member governments in 1950). Indian rupees ceased to be legal tender in Eritrea on 1 May 1942 (Gill 1991: 64). Barclays Bank (Dominion, Colonial and Overseas) continued to act as the agent for the British forces. |
| 15 September 1952
-31 December 1963 |
central bank (with commercial banking functions) (as part of a currency union with Ethiopia) | Ya'Ityopy Mangest Bnk (State Bank of Ethiopia) (headquarters Addis Ababa, Ethiopia) | Ethiopia, proclamation of 26 August 1942, cited in Gill (1991: 65); Eritrea, constitution of 11 September 1952 (see Remarks) | Began to use Ethiopian currency upon federating with Ethiopia. The Eritrean constitution, enacted to provide a framework for the federation, omitted currency as a subject for provincial jurisdiction, therefore currency fell under Ethiopian jurisdiction. From 1961-1991 Eritrean guerillas battled Ethiopia for independence. |
| 1 January 1964
-September 1976 |
central bank (as part of a currency union with Ethiopia) | Ya'Ityopy Behérwi Bnk (National Bank of Ethiopia) (headquarters Addis Ababa, Ethiopia) | Ethiopia, Proclamation to Provide for the Regulation of the Monetary and Banking System, No. 206, 27 July 1963; Charter of the National Bank of Ethiopia, Order No. 30, 27 July 1963; both translated in National Bank of Ethiopia annual report 1964: 16-26 | The State Bank of Ethiopia split into two parts: a new central bank and the Commercial Bank of Ethiopia (headquarters Addis Ababa, Ethiopia). The central bank assumed responsibility for issuing coins, which had formerly been handled by the Ethiopian Treasury. After a revolution that deposed the king and established a Marxist government, Ethiopia nationalized private banks and insurance companies on 1 January 1975. |
| September 1976
-23 May 1993 |
monobank (as part of a currency union with Ethiopia) | Ya'Ityopy Behérwi Bnk (National Bank of Ethiopia) (headquarters Addis Ababa, Ethiopia) | Ethiopia, Proclamation No. 99, September 1976, cited in National Bank of Ethiopia annual report 1976: 5 | Gave the central bank greater powers of control over the financial system, converting the financial system into a monobank. |
| 24 May 1993
-7 November 1997 |
dollarization | Ethiopian birr (issued by central bank Ya'Ityopy Behérwi Bnk [National Bank of Ethiopia] [headquarters Addis Ababa, Ethiopia]) | Eritrea and Ethiopia, agreement of friendship and cooperation, September 1993 | Eritrea became independent from Ethiopia at the start of this period and soon established an embryonic central bank with limited powers (Eritrea, Proclamation No. 32/1993, 1993, cited in IMF 2003b: 34). Eritrea joined the IMF on 6 July 1994. |
| 8 November 1997
-present (2005) |
own central bank | [name in Tigrinya unknown to me; I welcome reader assistance] (Bank of Eritrea or National Bank of Eritrea [headquarters Asmara, Eritrea]) | Eritrea, Bank of Eritrea Proclamation, No. 31/ 1997, March 1997, cited in IMF (2003b: 34) | The central bank became full-fledged as a sign of independence. It issued coins as well as notes. |
Exchange rate arrangements: Eritrea
| Dates | Official arrangement | Source | Unofficial arrangement, if different | Remarks |
| about 1790
-1890 |
fixed; used silver Maria Theresa thaler | none; customary usage; see Gill (1991: 80) | The silver Maria Theresa thaler became the most widely used coin. Italian settlement first began in 1869, as Assab. Italy took possession of the port of Massawa in 1885, replacing an Egyptian garrison that had used Egyptian currency. Indian repees had also circulated in Assab (Mauri 2003b: 5). | |
| 1890
-1922 |
fixed; 1 tallero = 1 silver Maria Theresa thaler = 5 Italian lire | Italy, royal decree of 10 August 1890, cited in Gill (1991: 81); Mauri (2003b: 6-7) | As an attempted substitute for the Maria Theresa thaler, Italy minted the silver tallero eritreo in 1890 and 1896, withdrawing it in 1898. Tallero is Italian for "thaler." The coin was of the same weight but lesser fineness than the Maria Theresa thaler (0.8000 versus 0.8333), which caused Eritreans to reject it. The tallero was linked to gold thorugh the Italian lira, but that did not matter to Eritreans, who were accustomed to a silver standard. In 1918, Italy minted the silver tallero d'Italia or tallero veneto, whose fineness was 0.835. It also was not easily accepted because it differed in appearance from the Maria Theresa thaler and could not be used for trade with neighboring countries. | |
| 1922
-about 29 April 1941 |
fixed; used Italian lira | Gill (1991: 83) | Italy abandoned its attempt to issue a specifically Eritrean currency and introduced the Italian lira, as it was doing or had done in its other colonies. The lira was a decimal currency. | |
| about 30 April 1941
-30 April 1942 |
fixed; 20 East African shillings = UK£1 (1 East African shilling = 1 UK shilling) and Egyptian £1.025 = UK£1 | United Kingdom, Occupied Enemy Territory Administration, Notice No. 3, April 1941, reprinted n Barclays Bank (Dominion, Colonial and Overseas) (1948: 63-4) | Following the Allied capture of Eritrea from Italy during the Second World War, the British administration introduced the East African shilling, used in British East African colonies. Silver Maria Theresa thalers and Egyptian government currency, and were also legal tender. Indian rupees were also legal tender (United Kingdom, Occupied Enemy Territory Administration, notice of 4 April 1941, cited in Gill 1991: 64). Indian rupees ceased to be legal tender in Eritrea on 1 May 1942 (Gill 1991: 64); it is unclear when they ceased to be legal tender in Ethiopia, but I assume it was around the same time. Italian currency was not demonetized until 1942. The East African shilling was equal to the UK shilling. There was also a unit of account called the East African pound, equal to the UK pound (pound sterling). Maria Theresa thalers, Indian rupees, and pounds sterling were also legal tender. The East African shilling and Egyptian pound were decimal currencies; the pound sterling was not; and the Maria Theresa thaler was just a coin. Barclays Bank (Dominion, Colonial, and Overseas) opened | |
| 1 May 1942
-14 September 1952 |
fixed; 20 East African shillings = UK£1 (1 East African shilling = 1 UK shilling) | United Kingdom, Occupied Enemy Territory Administration, proclamations of early 1942, cited in Rennell Rodd (1948: 374) | The British occupation administration phased out the Egyptian pound. Indian rupees ceased to be legal tender on 1 May 1942 (Gill 1991: 64). | |
| 15 September 1952
-23 May 1993 |
used Ethiopian birr (as part of a currency union with Ethiopia); see table for Ethiopia for a history of exchange rate arrangements during this period | Ethiopia, Currency and Legal Tender Proclamation, No. 76 of 1945; Eritrea, constitution of 11 September 1952 (see Remarks) | See the table on Ethiopia for parallel market data on the Ethiopian birr. | Began to use the Ethiopian birr upon federating with Ethiopia. The Eritrean constitution, enacted to provide a framework for the federation, omitted currency as a subject for provincial jurisdiction, therefore currency fell under Ethiopian jurisdiction. Birr is from the Amharic word meaning "to be white," like a silver thaler (dollar). The birr was a decimal currency. |
| 24 May 1993
-24 July 1995 |
fixed; used Ethiopian birr | National Bank of Ethiopia bulletin 1992/1993, no. 4: 32 | The "auction rate" of the Ethiopian birr floated. | Eritrea became independent from Ethiopia on 24 May 1993. On 1 May 1993, Ethiopia had introduced a floating auction rate alongside an official rate that was periodically adjusted according to the evolution of the auction rate. Eritrea's central bank prescribed a commision of 0.25% for purchases and 0.75% for sales of foreign exchange other than notes. Authorized banks were allowed, but not required, to charge commissions of up to another 0.25% for purchases and 0.75% for sales of foreign exchange on their own account. The taxes started by 1994 (IMF ARER 1995: 161). |
| 25 July 1995
-29 March? 1996 |
fixed; used Ethiopian birr (see Remarks) | IMF ARER (1996: 164, 169) | Ethiopia unified its exchange rate after a fashion and Eritrea followed. Taxes mandated by Ethiopia's central bank, plus commission fees charged by Ethiopian banks, imposed spreads of 2-3% between buying and selling rates in Ethiopia. I continue to classify Ethiopia's exchange rate for this period as a dual rate although the IMF does not. | |
| 30 March? 1996
-31 March 1997 |
fixed, dual rate; used Ethiopian birr | IMF ARER (1997: 262, 296 | Eritrea introduced a more depreciated preferential exchange rate for most private imports and exports as well as conversion of remittances by Eritreans living abroad. I continue to classify Ethiopia's exchange rate for this period as a dual rate although the IMF does not. | |
| 1 April 1997
-7 November 1997 |
fixed; used Ethiopian birr (see Remarks) | IMF ARER (1998: 314, 318) | Eritrea unified its exchange rate. Because the of the spread resulting from taxes plus commission fees, I classify Ethiopia's exchange rate for this period as a dual rate, although the IMF does not. | |
| 8 November 1997
-30 June 2000 |
Eritrean nafka, independent float | Eritrea, Bank of Eritrea Proclamation, No. 31/ 1997, March 1997, cited in IMF (2003b: 34); IMF ARER (1998: 314, 318) | In practice, the central
bank kept the nafka in
a range of 7.05-7.20
per US dollar until
allowing more
flexibility in the
exchange rate starting
1 May 1998 (IMF
ARER 1999: 308). The
central bank held the
exchange rate to 8.1
Eritrean nafkas =
US$1 from April-October 1999 and at
9.6 Eritrean nafkas =
US$1from November
1999 (IMF 2003b: 47).
A parallel rate existed from 1998 (IMF 2003a: 17). |
Introduced a national currency at 1 Eritrean nafka = 1 Ethiopian birr for the period 8-22 November 1997, floating thereafter. The currency was named for the town of Nafka, where the Eritrean People's Liberation Front held its congresses during the war for independence against Ethiopia. The foreign-echange market became more flexible from May 1998, when the central bank allowed banks to set their own exchange rates (Bank of Eritrea, Foreign Exchange Regulation, 1 May 1998, cited in IMF 2003b: 47). |
| 1 July 2000
-31 October 2000 |
pegged, dual rate; official rate 9 Eritrean nafkas = US$1 | Eritrea, Legal Notice No. 44/2000, 1 July 2000, cited in IMF 2003b: 47; IMF ARER (2001: 321, 324) | A parallel rate existed (IMF 2003a: 17). | Pegged to the US dollar, imposed restrictions on foreign-exchange transactions, and allowed foreign-exchange bureaus to sell foreign exchange only to the central bank. Eritrea was in the midst of a border war with Ethiopia at the time. The central bank held the second exchange rate to 9.6 Eritrean nafkas = US$1 (IMF 2003b: 47). |
| 1 November 2000
-31 July 2001 |
pegged; 10 Eritrean nafkas = US$1 | IMF ARER (2001: 321, 324) | An unofficial parallel rate existed (IMF 2003a: 17). | Unified the foreign-exchange bureau exchange rate and the commercial bank exchange rate. |
| 1 August 2001
-2 November 2003 |
pegged; 13.50 Eritrean nafkas = US$1 (IMF 2003b: 49 says that according to Eritrean authorities, the system was a managed float) | Eritrea, Legal Notice No. 49/2001, 1 August 2001, cited in IMF 2003b: 48; IMF ARER (2002: 326) | An unofficial parallel rate existed (IMF 2003a: 17). An IMF report (IMF 2003b: 49) termed the exchange rate "a failed fixed [in my terminology, pegged] exchange rate." | Devalued in preparation for removing exchange controls, which was done on 15 August 2001 (Eritrea, Legal Notice No. 49/2001, cited in IMF ARER 2002: 329). The central bank repealed its 0.75% tax on sales of foreign exchange effective 15 August 2001 (IMF ARER 2002: 329). In 2002 the parallel market changed from an informal market consisting of unlicensed dealers to a market that included licensed dealers and even the central bank (IMF 2003b: 50 n. 21). |
| 3 November 2003
-31 December 2004 |
pegged, dual rate; official rate 13.50 Eritrean nafkas = US$1 | IMF ARER (2004: 328) | The unofficial parallel market rate was at a premium of about 50% to the official rate (IMF ARER 2004: 325). | A preferential rate of 19 Eritrean nafkas = US$1 came into efect for exports and remittances from Eritreans living abroad. |
| 1 January 2005
-present (2005) |
pegged; 15 Eritrean nafkas = US$1 | IMF ARER (2005: 338) | A premium remained in the unofficial parallel market (IMF ARER (2005: 334). | Unified the official exchange rate. |