IMF Recommends CBE’s Asset Quality Review

Feb 1 , 2020


[ssba-buttons]

The latest staff report of the International Monetary Fund (IMF) recommends the asset quality review of the Commercial Bank of Ethiopia (CBE) due to tight liquidity. CBE’s liquidity ratio dropped last year due to a persistent asset-liability mismatch, according to the report. It also stated that the Bank has been prioritising the financing of long-term projects undertaken by state-owned enterprises by investing in bonds and extending loans, drawing on its deposit base. Credit to the state-owned enterprises has expanded in line with significant growth in state investment in recent years, which tightened liquidity conditions of the Bank and exacerbated the maturity mismatch, according to the IMF. Out of the total credit portfolio of the Bank, the energy sector has the highest exposure, accounting for about 40pc of the Bank's total asset portfolio. The report also indicated that sluggish repayment of state-owned enterprise's loans exacerbated the CBE’s liquidity position. "CBE has a large exposure to foreign exchange risk, as the Bank plays a central role in foreign exchange transactions,'' reads the report. The report has also downgraded Ethiopia's prospect for economic growth in the current year by one percentage point, from the 7.2pc it had projected earlier, attributing the possible growth decline to macroeconomic policy launched to address the structural imbalance in the economy.


Radar

NBE Expands Diaspora Warning Over Unlicensed Remittance Firms

The National Bank of Ethiopia (NBE) has issued an expanded public warning targeting unlicensed remittance operators abroad, flagging four U.S.-based companies it says are undermining Ethiopia's financial regulations. The warning includes newly disclosed findings and specific cases that underscore growing concerns about illicit cross-border financial activity. Remittance flows remain a vital lifeline for Ethiopia's economy, supporting households and supplying critical foreign currency. But as...


Radar

Stricter Standards Unveiled for Public Auditors, Accounting Firms

The Accounting & Auditing Board of Ethiopia (AABE) has issued a new directive aimed at strengthening oversight and professional standards in the accounting and auditing sector. Grounded in the Financial Reporting Proclamation, the directive addresses long-standing regulatory gaps while preparing the sector for the country's emerging capital market. Key provisions introduce stricter licensing standards for public auditors, professionals permitted to audit public interest entities. Applican...


Radar

Export Recovery Gains Ground, Industry Still Lags Potential

The Ministry of Industry (MoI) has reported a modest rebound in Ethiopia's manufacturing exports, with revenues climbing eight percent in the 2025 fiscal year to reach 318 million dollars. Minister Melaku Alebel attributed the growth to a gradual sectoral recovery but acknowledged the figures remain well below the country's industrial potential. Speaking at a forum held with 60 top-performing manufacturers, Melaku said the ministry is working to unlock bottlenecks and improve coordination. Th...