Ethiopia fears U.S. crisis may cut remittances -cbank official

02 October, 2008

ADDIS ABABA, Oct 2 (Reuters) - Instability in U.S. financial markets could cut vital remittances to Ethiopia, now worth $1.2 billion annually, a central bank official said on Thursday.

Millions of Ethiopians impoverished during the regime of Marxist dictator Mengistu Haile Mariam are dependant on money sent by relatives living mainly in the United States.

Elias Loha, manager of Reserve Management and Foreign Exchange Market of Ethiopian National Bank (NBE) said remittances that help families survive, or for investment, are the second largest source of income after exports.

"We are concerned and worried that as a result of the financial crisis ... some of the Ethiopians may loose their jobs and as a result they may stop sending money to help their families back home," Elias said in a Reuters interview.

Ethiopia, Africa's leading producer of coffee, generates up to $1.5 billion from merchandise export annually.

"NBE has no direct relations with U.S. banks in the financial crisis. Our worry is that as a result of the crisis, the $1.2 billion remittance may be reduced," he said.

The crisis has already started biting.

Asnaketch Hailu, a widow with two children in the United States, depends on money they send her for survival. They have already warned her the monthly $200 may not be coming.

A follower of the Orthodox Christian religion, Asnaketch prays daily that the crisis will be over. (By Tsegaye Tadesse, Editing by Helen Nyambura-Mwaura and Ron Askew)