Ethiopia’s Macroeconomic Reforms Secure Strong International Backing, Yield Tangible Results: NBE Governor

Addis Ababa, May 15, 2025 (FMC) — Ethiopia’s macroeconomic reform agenda has gained substantial international support and is already delivering strong early results, according to National Bank of Ethiopia (NBE) Governor Mamo Mihretu.

Delivering a keynote address at the opening of the Ethiopia Finance Forum 2025 in Addis Ababa, the Governor provided a comprehensive overview of the government’s reform program and the NBE’s transformative initiatives.

The forum, hosted by NBE, brought together policymakers, financial institutions, development partners, private sector actors, diaspora members, and international stakeholders to deliberate on the future of Ethiopia’s financial system.

Governor Mamo said the reform process was meticulously designed and coordinated over more than a year, with all key stakeholders involved from the outset. The reforms target core policy areas—monetary, exchange rate, and financial sector governance—with the aim of making the financial system more competitive, market-oriented, open to foreign investors, digitally driven, and inclusive.

He highlighted a series of first-of-their-kind reforms introduced by the NBE: price stability is now the central bank’s primary goal; a policy rate has been established; a Monetary Policy Committee has been formed; and new markets such as NBE Open Market Operations and an interbank money market have been launched. The interbank market alone has seen transactions exceed 628 billion Birr.

In foreign exchange policy, the reforms have shifted toward market determination of the exchange rate, removed surrender requirements, granted exporters more favorable retention privileges, introduced FX bureaus, eased foreign borrowing rules, and enabled foreign portfolio inflows into Ethiopia’s capital market.

To align with international standards, the central bank’s autonomy has been enhanced, regulations modernized, foreign banks permitted entry, the largest state-owned bank recapitalized, and initiatives for digitization and financial inclusion expanded.

Governor Mamo noted that inflation has dropped from nearly 30% to 13.6%, the lowest in five years, largely due to the elimination of monetary financing for the first time in more than a decade. He also reported a robust FX supply response, including 108% growth in goods exports, rising remittances and service revenues, increased capital inflows, and a 200% boost in NBE’s foreign exchange reserves.

To mitigate adverse effects on low-income communities, the government has subsidized fuel, fertilizer, and essential medicines.

He also acknowledged significant external support: “We have received financial backing and debt service relief from partners in the Middle East, China, and Paris Club countries,” he said, adding that the IMF and World Bank have provided financing “exceptional in size,” reflecting the strength of Ethiopia’s reform efforts.

Looking ahead, the Governor said the focus will be on fine-tuning the reforms and pushing the financial sector toward the “frontiers of finance”—with priorities in digitization, payments, financial inclusion, remittances, and innovation.

“The future of finance is bright in Ethiopia,” he concluded. “With strategic vision, bold actions, and patient determination, Ethiopia will be a beacon of light on the African continent.”