Ethiopia’s CBE Faces Extended IMF Deadline Amid Persistent Foreign Exchange Gaps

The IMF has extended the Commercial Bank of Ethiopia’s (CBE) compliance deadline for reducing its Net Open Position (NOP) to March 2026, due to weaker than expected foreign exchange inflows. CBE’s NOP reached ‑$500 million in Q1 FY 2025/26, fueled by declining remittances and rising private sector FX demand. Weekly NBE-CBE consultations and targeted diaspora campaigns aim to mobilize FX and stabilize the market.

This adjustment aligns with broader macroeconomic reforms under Ethiopia’s $3.4 billion Extended Credit Facility (ECF). NBE reforms, including the revised NOP directive, liberalized FX auctions, and stricter exposure limits, are complemented by World Bank support under the Financial Sector Strengthening Project (~$700 million). Measures aim to enhance FX market efficiency, strengthen regulatory oversight, and recapitalize CBE to mitigate liquidity and balance-of-payment pressures.

Structural FX challenges persist despite improvements in availability and reduced wait times. Ethiopia faces external financing gaps of $10.7 billion through 2027/28, requiring continued mobilization of exports, remittances, and debt relief under the G20 Common Framework. The revised NOP rules, effective January 2026, impose penalties for non-compliance, reinforcing banking discipline, aligning with international standards, and ensuring a more stable FX market and macroeconomic resilience.