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Directives for Amendment of External Loan and Supplier’s Credit Directives No. FXD-47-2017

Directives  No. 801/2021 Directives for Amendment of External Loan and Supplier’s Credit Directives No. FXD/47/2017

Whereas, the National Bank of Ethiopia is vested by its establishment proclamation no. 591/2008 and Investment Proclamation no. 1180/2020to regulate foreign exchange and having determined the procedures of registration to external loan is essentially set to be a criterion of regulating foreign exchange;

Whereas, an investor who acquires an external loan shall have also obliged to register such a loan with the National Bank of Ethiopia in accordance with the directives of the National Bank of Ethiopia;

Now, therefore, in accordance with Articles 20 and 27(2) of the National Bank of Ethiopia Establishment (as amended) proclamation No. 591/2008 and article 21(1 and 2) of  Investment Proclamation no. 1180/2020, these directives are hereby issued as follows:

Article 1 Short Title

These directives may be cited as “External Loan and Supplier’s Credit Directives No./801/2021.”

Article 2 Definition

In these Directives, unless the context requires otherwise:

Article 3 General

Article 4

Eligible Borrowers and Requirements

4.1   Exporter

4.2   Foreign Investor

  1. Application letter;
    1. Valid investment or any other valid business license given by pertinent licensing authority as the case may be applicable;
    1. Foreign capital registration certificate issued by pertinent government body
    1. For external loan, the draft loan agreement with detailed terms showing interest rates and applicable charges, loan disbursement schedule. repayment schedule, borrower-lender relationship, purpose of the loan and other particulars as may be deemed necessary by the National Bank of Ethiopia;
    1. For suppliers credit; Pro-forma invoice with a minimum 180 days credit period and a minimum of 1 year for external loan repayment period.

4.3  Manufacturing Sector

Article 5

Approval and Registration of External Loan

Article 6

All- in- Cost Ceilings

Average Maturity PeriodAll-in-cost Ceilings
Up to three yearssix month LIBOR or Equivalent in EURIBOR Plus 2%
Three years and up to five yearssix month LIBOR or Equivalent in EURIBOR Plus 3%
More than five yearssix month LIBOR or Equivalent in EURIBOR Plus 5%

Article 7 Guarantees

Any form of guarantee may not be issued by government and banks for private loan.

Article 8 Repayment of External Loan

  1. Application letter;
    1. Copy of external loan registration letter and
    1. Loan repayment schedule showing the computation of principal, interest and other charges as may deemed necessary by the National Bank of Ethiopia.

Article 9 Repeal

Registration of External Loan and suppliers’ or Foreign Partners’ Credit Directives No FXD/47/2017 is hereby repealed and replaced by these Directives.

Article 10 Effective Date

These Directives shall enter into force as of June 15, 2021.

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