The National Bank of Ethiopia (NBE) has revised its foreign-exchange directive to allow commercial banks to approve Letters of Credit (LCs) and Cash Against Documents (CAD) for institutions holding foreign-currency and retention accounts without requiring prior approval from the central bank. The NBE also instructed banks to standardize LC-related fees and charges on an annualized, pro-rata basis, while keeping them within the maximum limit previously set by the bank.
The changes, announced on 25 May 2026, form part of the central bank’s broader shift toward a market-based foreign-exchange regime launched in July 2024. The NBE said the latest amendments are aimed at removing approval bottlenecks, improving the efficiency of foreign-exchange transactions and strengthening Ethiopia’s trade finance system.
Under the revised rules, banks may approve LCs on acceptance for clients with foreign-currency or retention accounts without first seeking NBE approval. The same applies to CAD transactions. Account holders under these arrangements may also initiate shipments without prior bank approval, although payment will still depend on the submission and verification of the required documents.
The central bank said the fee rationalization is intended to make LC charges more competitive and align them with international pricing practices. It added that the measure is expected to reduce costs for importers and exporters while supporting the credibility of Ethiopia’s ongoing foreign-exchange reforms.
The NBE said it will continue monitoring developments in the foreign-exchange market and take additional steps if necessary to support stability and efficiency.
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