The National Bank of Ethiopia (NBE) has approved a new stimulus package for the hospitality industry of the country in an attempt to offset the effects of the COVID-19 pandemic on the tourism sector. The new stimulus is an extension of the first package that expired on November 10th, 2020.

According to NBE, commercial banks are allowed to get loans of upto 3 billion ETB total to provide loans to hospitality businesses that are in need. 

The previous package that had been provided to the hospitality industry amounted to 3.3 billion ETB.  Hotels had requested 6.6 billion ETB in relief funds at the beginning of the pandemic and continue to ask for more assistance even though the amount for the first package has not been fully covered yet. 

Interest rates for the new package are going to be calculated at a rate of 5.5 percent which is a .5 percent increase from the 5 percent interest rate of the previous package. 

The increase comes after commercial banks asserted that they were incurring service costs during previous loans as they were borrowing from the commercial bank at a 5 percent interest rate as well. The current interest rate allows the banks to charge a 1 percent interest rate for themselves in addition to the 4.5 percent they get charged by NBE.

The new package is set to expire on June 22nd of this year and can only be used to pay salaries and to supplement working capital.

The Reporter

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