Liquidity shortage in Ethiopia worsens as banks struggle to meet customers' cash withdrawal demands due to increasing requirements for mandatory treasury bills and legal reserves. The challenge comes as the demand for cash during the export season put additional pressure on banks' liquidity positions and make it more challenging for them to meet customers' cash withdrawal demands.
The liquidity shortage in Ethiopia has been exacerbated by the increasing amount of money that banks need to spend on buying mandatory treasury bills and increasing legal reserves. These requirements have put pressure on banks' liquidity positions, making it more challenging for them to meet customers' cash withdrawal demands.
“While the export season can be a significant source of revenue for Ethiopia, it is important to ensure that the financial system has sufficient liquidity to support the needs of all stakeholders. Efforts may need to be taken to manage the demand for cash during the export season and ensure that banks have adequate reserves to meet withdrawal demands,” a banker working at one of private banks told Birr Metrics.
The impact of the liquidity shortage is being felt by both individuals and businesses, who are struggling to access the cash they need to operate. Some businesses have been forced to delay payments to suppliers and employees, causing further financial strain.
The central bank has not yet commented on the situation, but it is hoped that measures will be taken to address the issue and provide relief to those affected.
Customers who are experiencing difficulties withdrawing cash from their banks are advised to speak with a bank representative to understand the current situation and any potential limitations or restrictions on cash withdrawals. Alternatives such as electronic transfers or online banking services may also be worth considering, bankers advised.