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New Directive Issued for Writing Off Uncollectible Debts for State Holding Companies and Regulatory Authorities

The Reporter (Amharic) · 3 hours ago · Read the Full Story on The Reporter (Amharic)
New Directive Issued for Writing Off Uncollectible Debts for State Holding Companies and Regulatory Authorities
AI SUMMARY

The Ministry of Finance has issued a new directive authorizing state-owned holding companies, regulatory authorities, and public enterprises to write off uncollectible debts, payables, and worthless assets.

  • The Ministry of Finance issued the implementation directive at the end of September to address long-standing debts accumulated by federally owned public enterprises.
  • Chief executive officers of state-owned holding companies and regulatory bodies are authorized to write off uncollectible debts of up to 200 million birr.
  • The Board of Directors of a public enterprise is authorized to approve the write-off of uncollectible debts up to 100 million birr, while amounts exceeding 200 million birr require approval from the holding company or supervisory authority's board.
  • Chief executive officers can individually write off minor uncollectible debts of up to 10,000 birr, provided the cumulative total within a single fiscal year does not exceed 500,000 birr.
  • The chief executive of a Level One public enterprise, classified by Ethiopian Investment Holdings, is authorized to write off up to 50 million birr in uncollectible debts within a single fiscal year.
  • The Commercial Bank of Ethiopia and the Development Bank of Ethiopia must implement the directive in compliance with National Bank of Ethiopia regulations.
  • Debts can be written off under conditions such as debtor bankruptcy, the death or disappearance of the debtor with no seizable assets, documented fraud or error where responsible parties cannot be identified, or force majeure.
  • Public enterprises must establish a liquidation committee to verify conditions before writing off any debt, and all write-off requests must be finalized within a non-extendable period of three years.
  • Payables can be written off if the creditor dies, if an organization dissolves without a legal heir or liquidator within the legal timeframe, or if a court prohibits payment.
  • Property and inventory can be written off if items become obsolete or unsellable, if goods in transit or inventory items are lost without a responsible party, or if long-term assets are destroyed and unaccountable.
  • Public enterprises must establish an audit committee consisting of at least five members to investigate and verify all write-offs of receivables, payables, and inventory values before removal from the books.
Read the Full Story on The Reporter (Amharic)
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