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Central Bank Orders Banks Freeze Loans

Aug 12 , 2021

The National Bank of Ethiopia (NBE) has ordered commercial banks to suspend all collateral-based loans, an unexpected measure communicated to executives through text message on August 11, 2021.

The suspension includes the disbursement of loans that have already been approved.

The text messages did not specify how long the suspension is to last. Neither are officials at the central bank forthcoming to explain the rationale behind their abrupt measure. The decision was made to curtail "economic sabotage," according to senior government officials.

Private commercial banks disbursed loans totalling 121.2 billion Br in the 2019/20 fiscal year while collecting 93 billion Br in repayment over the same period.

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