Ethiopia to provides $460 million to private banks

In an effort to rescue the economy from collapsing due to COVID-19 pandemic, the Government of Ethiopia orders the central bank to disburse 15 billion birr (close to $460 million dollar) to private banks.

The decision is announced this afternoon by the Prime Minister’s Office after the national taskforce established to tackle the spread of COVID-19 (coronavirus) pandemic held a video conference. The National Bank of Ethiopia, which is in charge of regulating the financial sector of the country, is ordered to avail Birr 15 billion (about $459 million) liquidity for private banks to enable them to provide debt relief and additional loans to their customers in need.

It is stated that the macro-economic sub-committee has been undertaking dialogue with key industry stakeholders in various sectors to craft a way forward in safeguarding the economy. The decisions made by the government to stabilize the staggering Ethiopian economy also include tax exemption for the import of materials and equipment to be used in the prevention and containment of COVID-19.

In addition decision is also reached for banks to avail foreign currency for importers primarily importing goods and input materials for the prevention of COVID-19. It is also stated that the largest state-owned bank in Ethiopia with over half market share, Commercial Bank of Ethiopia, is ordered to increase the amount of money individuals can transfer through mobile banking, to limit in-person cash handling.

Today’s government decision also involves removal of the minimum price set by the National Bank of Ethiopia on the horticulture sector for flower exports. The Ministry of Revenue is also ordered to expedite Value Added Tax (VAT) returns to support companies with cash flows. It is also stated that the Ministry of Trade and Industry will continue strengthening the measures it is undertaking to control price increments and supply shortages of consumer goods.

Though currently there are only confirmed 16 COVID-19 patients in Ethiopia, the economy has already began feeling the negative impacts of the pandemic such as, #190 million loss of Ethiopian Airlines as well as export and import trade, hotel and the hospitality sectors, among others.