Ethiopia’s National Bank of Ethiopia (NBE) has announced a new regulatory measure requiring commercial banks to apply indicative prices set by the Ethiopian Customs Commission when processing foreign exchange transactions related to selected imported goods.
According to a statement issued by the central bank, the move is aimed at improving consistency, transparency, and data integrity in import-related foreign exchange transactions. The requirement applies specifically to the pricing of goods when banks open Letters of Credit (LCs) and issue import permits through other approved modalities.
The decision follows the implementation of Ethiopia’s consolidated Foreign Exchange Directive No. FXD/0V2024, which came into effect in July 2024. The directive marked a significant shift in the country’s foreign exchange framework by transitioning Ethiopia to a market-clearing exchange rate regime. Under the reform, banks were permitted to negotiate foreign exchange buying and selling rates directly with customers, replacing the previous system that relied on administratively set benchmarks.
As part of the reform, the longstanding minimum price requirement for imports was repealed. This change was intended to allow market forces to play a greater role in determining import pricing and foreign exchange allocation. However, the NBE noted that the reform also placed increased responsibility on banks to conduct proper price verification and due diligence when processing import-related transactions.
In particular, banks became responsible for assessing the reasonableness of prices declared by importers when opening LCs and approving other import permits. The NBE said this responsibility was critical to ensuring accurate reporting of foreign exchange flows and maintaining confidence in the liberalised exchange rate system.
Since the introduction of the directive, however, the central bank has observed inconsistencies in how banks are applying pricing standards. “The National Bank of Ethiopia has observed that prices used in Letters of Credit issued by most banks exhibit significant discrepancies when compared with reference prices applied by the Ethiopian Customs Commission,” the statement said.
These discrepancies, according to the NBE, have raised concerns about the reliability of import valuation data and the potential impact on balance of payments statistics. Inconsistent pricing across institutions can also create distortions in the foreign exchange market, particularly under a system where exchange rates are negotiated directly between banks and customers.
To address these concerns, the NBE announced that, effective January 27, 2026, all banks will be required to use indicative prices issued by the Ethiopian Customs Commission as reference benchmarks when opening Letters of Credit and processing import permits for selected items. While banks will retain the ability to negotiate exchange rates with customers, the indicative prices will serve as a standardised reference point for verifying the declared value of imported goods.
The central bank said the measure is intended to harmonise pricing references across financial institutions, enhance the accuracy of balance of payments data, and strengthen the overall integrity of the foreign exchange market. By aligning bank pricing practices more closely with customs benchmarks, regulators aim to reduce the risk of under- or over-invoicing and improve oversight of cross-border trade flows.
The NBE also emphasised that the new requirement is part of its broader reform agenda and does not signal a reversal of market-oriented foreign exchange policies. Instead, the measure is designed to support the effective functioning of the liberalised system by addressing implementation gaps that have emerged since the reforms were introduced.
“The National Bank of Ethiopia will continue to monitor implementation and take appropriate measures to support the effective functioning of the foreign exchange market in line with the ongoing reform agenda,” the statement added.
The announcement signals a continued focus by Ethiopian authorities on strengthening regulatory controls while advancing structural reforms in the financial sector. As banks and importers adjust to the new requirements ahead of the January 2026 effective date, further guidance may be issued to clarify the scope of affected goods and the operational details of the pricing benchmarks.
