Refugees as people crossing international borders in order to escape conflict or Human right violation have been a central focus of international relations.The presence of refugees has both positive and negative impacts on the socio-economic of the host community (Berry, 2008).Therefore, the study generally aims to investigate the socio economic impact of refugees in the Bambasi refugee camp on the host community who are living surrounding the camp. Specifically the study aimed to identify and the changes that the refugees and the refugee camp brought to the host community. The study employed both qualitative and quantitative approach of data gathering.In the study, descriptive design was employed. Generally. sample size of 124 sample households was determined by using                 S = X² NP (1-P) ÷ d² (N-1) + X²P (1-P),such that 90 male households, 34 de facto women households,  chairman of kebeles, experts from office of agriculture and four aged person from rural kebeles were included by using multi stage sampling method.The study employed questionnaires, interviews, document reviewing and discussion with focus groups. On the basis and types of data gathered and the instrument used, both quantitative and qualitative techniques of data analysis or binary logistic regression supported by SPSS were employed. In order to calculate economic welfare loss, I used the change in price and the change in quantity demanded of goods and services. The formula to make the calculation is: Welfare Loss =   0. 5 * (P2 - P1) * (Q1 - Q2).The result of the study indicates that presence of refugee and establishment of refugee camp has greatly affected the livelihood of the host communities who are living around the camp. As the study indicated that the coming of refugees to this locality has helped the host communities to provide health service, clean water, school and generator that does not exist before.  Thus, to improve the lives of host communities and refugee Ethiopian government should reform camp policies which necessarily defend the social and economic condition of the local communities who are living around the camp.