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Half a billion birr paid out over the last year alone

Officials at the Ministry of Foreign Affairs have voiced dissatisfaction over service fees charged by the National Bank of Ethiopia (NBE) and the state-owned Commercial Bank of Ethiopia (CBE) on transactions involving foreign diplomatic missions.

Asmamaw Nure, a state minister and advisor to the Ministry, expressed concerns over the financial burden the 11 percent service fee on budgetary transfers to foreign diplomatic missions is causing on the Ministry’s coffers. He told Parliament the fees alone amounted to half a billion birr while exchanging and transferring annual budgets to Ethiopian diplomatic missions and embassies abroad this year.

Asmamaw made the comments earlier this week during a public Parliamentary discussion session about the Finance Ministry’s proposed 971 billion birr federal budget for the upcoming fiscal year.

The advisor highlighted significant concerns regarding the budgetary provisions for a federal institution representing Ethiopia in international relations. He pointed out that foreign currency expenditures consume a substantial 80 percent of the Ministry’s budget. Since the government allocates the Ministry’s budget in birr, it must convert the relevant amount to foreign currencies in order to finance its missions.

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The conversions are carried out primarily by the CBE, while the central bank also levies a small charge for enabling the cross-border transfers. Asmamaw indicated the CBE is charging a significant amount for its services, putting a dent in the Ministry’s finances. Foreign Affairs officials say they have asked the banks to halve their commission rate to five percent.

They also argued the Ministry’s budget is insufficient to cover the extensive financial obligations that must be met in foreign currency, including salaries, rent and lease fees, insurance, annual membership fees for international organizations, and projects.

“The current budget does not adequately address the financial realities of our diplomatic missions,” said Asmamaw, who argues the shortfall impedes the Ministry’s ability to effectively represent Ethiopia on the global stage.

The budget proposal submitted by the Finance Ministry indicates allocations for several projects under the Ministry of Foreign Affairs. These include an embassy and residential building in Dakar, Senegal, a feasibility study for the Moscow Mission building, diplomatic residences in Berlin and Brussels, office buildings in Kigali, Nairobi, Jeddah, Abuja and Dodoma, renovation works for Ethiopian properties in Jerusalem, residences in Pretoria and Ottawa, and an embassy and residential building in South Sudan, among others.

Sources indicate that Ethiopia allocated close to USD three million towards the payment of membership fees to various international organizations, including the UN and the AU.

The Ministry also requires substantial finances for the upkeep of its diplomatic network, which includes more than 44 embassies and close to 60 consulates around the globe.

Asmamaw says the service fees imposed by the NBE and CBE, which total 11 percent, have been in effect since the 2022/23 fiscal year without the Ministry’s knowledge. The advisor wants to see a return to the previous rates of 1.5 percent for the NBE and 3.5 percent for the CBE.

“The Ministry of Finance has to defend us; this is a problem that demands a solution,” said Asmamaw. “If corrected, no one will be adversely affected. The banks may see reduced profits, but they won’t incur losses. We shouldn’t have to inflate our expenses to maximize bank profits. It is unnecessary.”

Fantaye Roba, director of finance and budgeting at the Ministry, indicated his office has been easing the burden using supplementary budgets. However, the Finance Ministry’s refusal to grant supplementary budgets for the coming year leaves Fantaye and his peers between a rock and a hard place.

“The payment is simply a rotation of money from the right pocket to the left, as both the banks and the Ministry are government institutions. Such payments should be avoided,” said the Director.

Eyob Tekalign (PhD), a state minister of Finance, acknowledged the redundancy and the negative effects the bank service fees have had on the Foreign Affairs Ministry. He said he would work towards a solution through consultation with the banks.

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