National Bank of Ethiopia eases LC rules, caps fees in FX reform push 

By HER staff reporter
The National Bank of Ethiopia (NBE) has amended 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 prior NBE approval. It also ordered banks to rationalize LC-related fees and charges by applying them on an annualized, pro-rata basis and keeping them within the maximum limit previously set by the central bank.
The changes, announced on 25 May 2026, are part of the central bank’s broader transition toward a market-based foreign-exchange regime introduced in July 2024. The NBE said the latest amendments are meant to ease approval bottlenecks, improve the efficiency of foreign-exchange transactions and strengthen Ethiopia’s trade finance system.
Under the revised rules, banks may now approve LCs on acceptance for account holders with foreign-currency or retention accounts without seeking prior approval from the NBE. The same applies to CAD transactions. Institutions holding such accounts may also initiate shipments under CAD arrangements without prior bank approval, although payment will still depend on submission and verification of the required documents.
The central bank said the fee rationalization is intended to make LC charges more competitive and consistent with international pricing practices. It added that the measure should help reduce costs for importers and exporters while supporting the credibility of Ethiopia’s ongoing foreign-exchange reforms.
The NBE said it will continue to monitor developments in the foreign-exchange market and take further action if needed to support stability and efficiency.