Sunday, September 24, 2023
NewsStruggling Tigray firms lobby gov’t to forgive war-era loan interest

Struggling Tigray firms lobby gov’t to forgive war-era loan interest

But federal officials gave a lukewarm response

Business leaders in Tigray are ramping up pressure on the Ethiopian government to provide debt relief for loans taken out before the region’s two year brutal civil war ended last November.

Officials from the Tigray Chamber of Commerce have lodged formal letters with the Ministry of Finance and central bank requesting exemptions on accumulated interest charges that have accrued on loans over the past two years.

According to sources familiar with the letters, the requests were directly addressed to Finance Minister Ahmed Shide and National Bank of Ethiopia Governor Mamo Mihretu.

The chamber met with the two officials last week to discuss their demands.

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“Following the Pretoria ceasefire agreement, Tigray’s private sector is struggling to get back on its feet,” one letter states. “But serious hurdles remain, such as massive interest that has built up on loans issued before the war began.”

While the central bank issued new rules last month giving Tigray businesses an 18-month grace period before resuming loan payments, business leaders say more substantial relief is needed.

“The bank’s directive shows good intentions but does not go far enough given the immense challenges facing companies here,” the letter argues. “It fails to specify if accumulated interest must still be paid – and banks continue demanding payment in full.”

A letter from Tigray Chamber of Commerce underscores the critical need to support local businesses as the region works to rebuild from devastation caused by the long-running conflict, according to officials.

“Putting Tigray businesses back on their feet is essential for reconstructing the economy and contributing to national growth once more,” the letter states.

The businesses have become victims through no fault of their own, with many investments damaged or destroyed in the fighting, according to the Chamber.

Tigray firms still await fresh financing, raw materials, spare parts and aid to resume operations, according to Desta Berhe, deputy president of the chamber.

“We’ve asked the Ministry of Finance and central bank to waive interest accrued on loans during the years of war, as businesses simply can’t pay what they owe,” Desta told The Reporter.

While industries across the region suffered damage, staple crops like sesame were also looted from commercial farms and warehouses, the letter indicates.

But federal officials gave a lukewarm response, sources say, as dwindling currency reserves and stretched budgets limit what can be offered.

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