The Council of Ministers has proposed a draft amendment to the National Bank of Ethiopia (NBE) to address limitations in the current legislation. The amendment aims to support development initiatives, promote national prosperity, and align with evolving international financial practices.
The Council also reviewed a draft bill concerning the operation of banks. In light of a new policy allowing foreign banks to operate domestically, the Council reiterated that there was a need to establish an operational framework and a system for registering and certifying these banks. Consequently, the council acknowledged the necessity of this bill and referred it to the House of Peoples’ Representatives (HPR) for further review. In addition, the approved proposals for reforming and increasing the capital of the Commercial Bank of Ethiopia (CBE). CBE is expected to play a more significant role in driving sustainable economic growth by improving asset quality and governance practices. The plan also emphasizes strengthening government financing mechanisms and ensuring robust financial reporting.
It is to be recalled that in September 2022, the Council approved a policy to open the banking sector to foreign investment. During the same year, the National Bank stated that it was preparing to invite international financial institutions into the Ethiopian financial sector.
The Council approved a third bill focusing on securing a USD 207.2 million loan from the International Development Association (IDA) to support the second phase of urban water, sanitation, and hygiene projects. With a minimal service charge, this interest-free loan is seen as essential for improving essential services in urban areas. Another bill proposes a property tax to achieve fairer wealth distribution among urban residents. The tax revenue would be used to enhance public services, modernize infrastructure, and strengthen local budgets across the nation. Regional administrations would have the authority to set their property tax rates based on specific conditions.
A fourth draft bill on the operation of banks acknowledges the changing global economic landscape and technological advancements. This bill would establish regulations for the entry of foreign banks into the Ethiopian financial system. A fifth bill emphasizing the importance of evaluating potential environmental and social impacts of development projects before their execution is also referred to as the HPR.
Source: Ethiopian News Agency
Additional source: 2Merkato Archives
Image source: 2Merkato Archives
