January 24, 2025

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National Bank of Ethiopia Lending

National Bank of Ethiopia Proposes Limits on Lending to Govt

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The National Bank of Ethiopia, through a a bill, has proposed restrictions on lending money to the government.

The Standing Committee on Planning, Budget and Finance Affairs of the House of People’s Representatives discussed the bill last week. National Bank Governor Mamo Mehretu gave a brief explanation on the contents of the bill.

NBE has proposed that it can provide the Federal Government with a temporary overdraft facility that is repayable within 12 months based on cash flow and the loan amount should not exceed 15 percent of the average annual government domestic income of the last three fiscal years.

The bill further proposes that both the board members and the governor and deputy governor of the bank must meet the minimum requirements set by the decree and have at least ten years of experience. In order to control conflict of interest, the members of the National Bank Board, Governor and Deputy Governor are prohibited from being directors, CEOs, senior executives, employees, partners or shareholders of any financial institution under the control of the National Bank or any legal entity that controls financial institutions.

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