25 May 2026 | Addis Ababa, Ethiopia
The National Bank of Ethiopia, as part of its ongoing transition toward a market-based
foreign exchange regime, has been implementing a series of carefully sequenced
reforms to strengthen the efficiency, transparency, and competitiveness of the foreign
exchange market.
Since the introduction of the market-based foreign exchange regime in July 2024, the
NBE has continued to advance reforms aimed at establishing a well-functioning foreign
exchange system that aligns with international best practices. These efforts have
contributed to notable progress in enhancing market operations and supporting foreign
exchange market stability.
Despite these improvements, further amendment to the FX Directive has become
necessary to relax foreign exchange administration and approval bottlenecks for ease of
doing business and thereby strengthen the development of foreign exchange market.
In this regard, the articles of FXD/01/2024 are hereby amended as follows:
I. Amendment to FX Directive No. FXD/01/2024
- Banks are authorized to approve Letters of Credit on acceptance for institutions
holding foreign currency accounts, and retention accounts holders, without prior
approval of NBE. - Banks are authorized to approve Cash Against Documents on acceptance for
institutions holding foreign currency accounts, and retention account holders,
without prior approval of NBE. - Institutions holding foreign currency accounts, including retention account
holders, may order or initiate shipment of goods under Cash Against Documents
arrangements without prior approval of Banks. Payment processing shall be
subject to the submission and verification of the required documents.
II. Rationalization of Fees and Charges on Letters of Credit
The structure of fees and charges applied by commercial banks on foreign exchange
related Letter of Credit (LC) transactions remain inconsistent with prevailing global
norms. In view of this, the NBE has undertaken a rationalization of fees and charges on
LC arrangements to ensure alignment to international standards.
Accordingly, the National Bank of Ethiopia hereby instructs all banks to implement the
following:
1. Fees and charges applicable to Letter of Credit transactions for institutions
holding foreign currency accounts, including retention account holders, shall be
determined on an annualized basis and applied pro-rata in accordance with the
tenor of the respective Letter of Credit.
2. The annualized fee rate applicable to Letter of Credit transactions shall not exceed
the maximum limit previously set by the National Bank of Ethiopia.
This measure is intended to ensure that LC-related charges are competitive and
consistent with international pricing practices. It is also expected to reduce transaction
costs for importers and exporters, enhance the competitiveness of Ethiopia’s trade
finance environment, and further strengthen the credibility and effectiveness of ongoing
foreign exchange reforms.
The National Bank of Ethiopia will continue to monitor developments closely and take
additional measures as necessary to support a stable and efficient foreign exchange
market.
