The National Bank of Ethiopia (NBE) has amended its foreign exchange directive, allowing banks to approve Letters of Credit (LCs) for institutions holding foreign currency and retention accounts without prior approval from the central bank.
In a public notice issued on May 25, 2026, the NBE also authorized banks to approve Cash Against Documents arrangements for the same account holders without prior approval from the central bank.
The amendment further allows institutions holding foreign currency and retention accounts to initiate shipment of goods under Cash Against Documents arrangements without prior bank approval, subject to submission and verification of required documents during payment processing.
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The changes were introduced under amendments to Directive No. FXD/01/2024.
The central bank also instructed commercial banks to revise fees and charges on foreign exchange-related Letter of Credit transactions, stating that current pricing structures remain inconsistent with international practices.
According to the notice, LC fees for foreign currency and retention account holders must now be calculated on an annualized basis and applied pro-rata depending on the tenor of the Letter of Credit. The annualized fee rate must also remain within the maximum limit previously set by the NBE.
