The National Bank of Ethiopia has announced a fresh set of foreign exchange (FX) reforms aimed at improving trade efficiency, reducing administrative bottlenecks, and aligning the country’s financial system with international best practices.
In a public notice issued on 25 May 2026, the central bank said the latest amendments to FX Directive FXD/01/2024 are part of Ethiopia’s ongoing transition toward a more market-based foreign exchange regime, first introduced in July 2024. The reforms are designed to enhance transparency, improve ease of doing business, and strengthen overall FX market stability in Ethiopia.
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Under the revised directive:
- Commercial banks are now authorized to approve Letters of Credit (LC) on acceptance for institutions holding foreign currency and retention accounts without prior approval from the National Bank of Ethiopia.
- Banks can also approve Cash Against Documents (CAD) transactions for eligible foreign currency account holders without needing prior NBE clearance.
- Importers under CAD arrangements may initiate shipment of goods directly, provided required documentation is submitted and verified through banks.
These changes significantly reduce approval delays, shifting greater operational responsibility to commercial banks while maintaining documentation-based controls.
In a parallel move, the central bank has also standardized and rationalized fees and charges on Letter of Credit transactions. The key adjustments include:
- LC fees for foreign currency account holders and retention account holders will now be calculated on an annualized basis and applied proportionally based on the tenor of the credit.
- The annual fee rate must not exceed the maximum limit previously set by the central bank.
- Banks are instructed to align LC charges with international pricing norms to improve competitiveness in trade finance.
According to the central bank, the reform is expected to reduce transaction costs for importers and exporters while improving the efficiency of Ethiopia’s trade finance system.
The National Bank emphasized that these measures are part of a broader reform agenda to modernize Ethiopia’s FX market, strengthen investor confidence, and support private sector-led growth. The bank also indicated it will continue monitoring the market and introduce further adjustments where necessary.
