Ethiopia: World Bank's $700 Million Loan Targets CBE Restructuring, Financial Overhaul of Nbe and Dbe

Addis Abeba — The World Bank has approved a $700 million loan to strengthen the stability of Ethiopia's financial sector, with a particular focus on supporting balance sheet restructuring and the recapitalization of the state-owned Commercial Bank of Ethiopia (CBE).

The credit provided under the Financial Sector Strengthening Project (FSSP) is also earmarked to modernize the regulatory and supervisory framework of the National Bank of Ethiopia (NBE) and to transform the Development Bank of Ethiopia (DBE) into a sustainable development finance institution.

"By boosting the capacity of key financial institutions, we aim to build a more resilient and accessible financial system that truly meets the needs of all Ethiopians," said Maryam Salim, World Bank Country Director for Eritrea, Ethiopia, South Sudan, and Sudan.

Last month, the House of Peoples' Representatives approved a proposal to increase the capital of CBE by an additional 54.6 billion birr.

Legislators also passed a bill aimed at addressing approximately 845.4 billion birr in non-performing loans accumulated by state-owned enterprises (SOEs) at CBE.

The law grants the Ministry of Finance the authority to issue 10-year local Treasury bonds, with the proceeds allocated to settle the debts owed to CBE by state-owned firms. The government will have a three-year grace period before beginning the repayment of these bad debts through the issuance of Treasury bonds.

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