Update on the New Forex Amendment Directive No. FXD/04/2026

Introduction 

On February 12, 2026, the National Bank of Ethiopia (“NBE”) issued the Foreign Exchange Amendment Directive  No. FXD/04/2026 (“Amendment Directive”) revising provisions of the Foreign Exchange Directive No. FXD/01/2024. (“FX Directive”). In this issue our insight, we highlight the key changes introduced by the new directive. For our analysis of the FX Directive, check our previous insight here. 

Removal of Surrender Requirement for Service Exporters

Under the FX Directive, exporters of goods and services are required to convert to local currency, immediately and at freely negotiated rates, 50% of the forex generated that was generated. The Amendment Directive has now removed the conversion requirement for exporters of services. Service exporters are now permitted to retain 100% of their export proceeds in their foreign exchange retention accounts and hold such proceeds for an indefinite period. However, the 50% surrender requirement continues to apply to exporters of goods. 

Expanded Authority Granted to Commercial Banks

1. Approval of External Loans and Supplier Credits: Previously, local recipients of external loans or supplier credits were required to obtain prior approval from the NBE and register the same with the NBE. The Amendment Directive transfers this approval authority to authorized commercial banks. Banks are now required to review applications and approve external loans or supplier credits in line with the FX Directive. Further, companies obtaining external loans or supplier credits must provide an undertaking confirming compliance with the required 60:40 debt-to-equity ratio.
2. Bank Guarantees for Private External Loans: Previously, government and private commercial banks were prohibited from issuing guarantees for private loans. The Amendment Directive now permits authorized banks to issue guarantees for private external loans, provided that such guarantees do not exceed 10% of the bank’s total capital. A bank-issued guarantee will be treated as a loan, and NBE’s Single Borrower Limit Directive will apply. This will allow eligible companies to back their external loans with guarantees from private banks, allowing for greater financing opportunities.
3. Dividend and Profit Repatriation: Banks are now authorized to approve and process the repatriation of profits and dividends arising from registered foreign investments. Previously, companies were required to obtain NBE approval for repatriation purposes. The Amendment Directive has eliminated NBE’s approval layer, allowing banks to process repatriation of profits and dividends directly. It must be noted, however, that foreign currency capital investments must still be registered with the NBE at the time of the investment to be eligible for repatriation by the commercial banks.
4. Extension of Import Application Validity: Previously, banks could only extend the 120-day validity period of import applications by an additional 30 days. Banks are now empowered to extend for good cause, as deemed necessary and with no specific date.

Relaxed Rules on Opening Foreign Currency Accounts

1. FDI and International Institutions: Previously, Foreign Direct Investment (FDI) companies, embassies, international organizations, and NGOs were required to obtain an NBE approval to open foreign currency accounts. The NBE approval letter is no longer required.
2. Removal of Minimum Deposit Requirement: The previous minimum requirement of USD 100 to open a foreign exchange savings account for resident and non-resident Ethiopians (including foreign nationals of Ethiopian origin) has been removed.
3. Profit-Making Institutions: Profit-making institutions (other than exporters) are now allowed to open current, savings, and time deposit foreign exchange accounts provided that the funds originate from abroad in the form of grants, gifts, or other foreign exchange sources. This is a significant reform, particularly for local companies and startups that receive foreign grants and were previously required to convert such funds into Birr.

Outward Investment by Ethiopian Entities

In a historic development, the Amendment Directive now permits Ethiopian entities to make investments outside Ethiopia, subject to the prior approval from NBE, which will be granted on a case-by-case basis. Previously, the FX Directive prohibited Ethiopian companies from making outward investments unless expressly authorized by the NBE, which, in practice, was not granted. The Amendment Directive has shifted this approach, adopting a permissive tone whereby outward investments are allowed, subject to prior approval from the NBE. Additionally, Ethiopian nationals may now make outbound remittances of up to USD 3,000 for family support, upon submission of the required documentation.

Relaxed Rules on the Use of Foreign Currency Accounts

Previously, FX account holders were permitted to utilise the foreign currency in their accounts only for limited purposes. The Amendment Directive has expanded this scope by introducing additional purposes for which FX account holders may use the foreign currency held in their accounts.

1. Foreign exchange account holders (including retention account holders) may use their accounts to pay for their spouse’s and children’s education, medical, and travel expenses abroad upon presentation of valid documentation.
2. Authorized banks may now issue internationally recognised payment cards to all foreign exchange account holders. These cards may be used for outbound retail payments, including e-commerce transactions, provided sufficient foreign currency is available in the account.

Increased Cash Holding Limits for Independent Forex Bureaus

The cash holding limit for Independent Foreign Exchange Bureaus (IFXBs) has increased from 10% to 25% of their capital. Any excess holdings is required to be sold to commercial banks.

Relaxed Rules on Advance Payment for Exports

Previously, exporters could only accept advance payments from buyers. Under the Amendment Directive, exporters can now receive advance payments from any party, provided that there is a clear agreement specifying that the transfer constitutes an advance payment, and the agreement is presented to the commercial bank. Foreign currency receipts may qualify as an advance payment for future exports if:

• marked as “advance payment for future export or import” if the intention is to show the buyer, or
• state the type of commodity to be exported, the invoice number or the contract number of the transaction, as the case may be, using the funds transferred in advance.

Relaxed Requirements for Medical and Education FX Payments

Previously, accessing foreign exchange for medical or education purposes required submission of, among other documents, a valid entry visa.  The Amendment Directive has eliminated visa and ticket requirements and now allows authorized banks to pay foreign exchange not exceeding USD twenty thousand (USD 20,000) or other equivalent currencies, for medical and education services as an advance payment.

Purchase of Foreign Exchange for Limited Local Payments

Forex bureaus, including Independent Forex Bureaus, may now sell foreign currency in cash upon presentation of proof of payment for specific local payments such as visa fees, immigration fees or license fees.

Forward Exchange Transactions

Previously, banks were permitted to enter into forward contract only with the prior approval of the NBE. Authorized banks may now enter into forward exchange contracts without prior NBE approval. Forward exchange contracts allow parties to agree to exchange currencies at a future date for settlement at a predetermined rate. This change would introduce increased flexibility in foreign exchange management for companies. .

Relaxed Security Deposit Requirement for IFXBs

IFXBs were previously required to deposit Birr 30 million as security, refundable after two years of operation. Under the Amendment Directive:

• NBE will release the full Birr 30 million security deposit for IFXBs that have been operational for at least one year.
• NBE will release half of the security deposit (Birr 15 million) for IFXBs that have been operational for at least six months

Conversion of Foreign Currency Without Customs Declaration

A person residing in Ethiopia who enters the country carrying foreign currency may, without presenting a customs declaration, is allowed to convert all foreign currency at an authorized Forex Bureau for the equivalent sum in Birr or deposit to his/her foreign currency account.

Conclusion

The Amendment Directive builds on the FX regulatory framework introduced in 2024 by further easing operational constraints and devolving certain regulatory functions from the NBE to authorized commercial banks. The changes introduce significant reforms, particularly with the elimination of previous restrictions and bureaucratic layers with respect to forex conversion, profit repatriation, and outward investment by Ethiopian entities. By removing approval layers, expanding permissible uses of foreign currency accounts, and introducing greater flexibility in areas such as forward contracts, guarantees, and advance payments, the Amendment Directive will reduce procedural bottlenecks and shorten transaction costs and timelines. Together, these measures indicate a continued move toward a more facilitative foreign exchange regime. The implementing capacity  and readiness of the commercial banks will be central to determining the full impact of the reforms on financing, investment flows, and cross-border transactions.