The National Bank of Ethiopia’s (NBE) purchases of domestically produced gold drove reserve money growth to 67 percent year-on-year in March 2026, up from 43 percent in February, according to the International Monetary Fund (IMF).
In its Fifth Review under Ethiopia’s Extended Credit Facility (ECF) program, the IMF said reserve money growth accelerated due to “significant rises related to NBE gold purchases.” The report also said broad money grew 37 percent year-on-year in March, down from a peak of 42 percent in December.
The report noted that the NBE maintained its policy interest rate at 15 percent during its December and March Monetary Policy Committee meetings. It also increased the reserve requirement for commercial banks from seven percent to 10 percent in response to rising excess liquidity and maintained the annual private-sector credit growth ceiling at 24 percent.
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According to the IMF, excess reserves in the banking sector stood at 4.4 percent of net deposits at the end of March, concentrated at the Commercial Bank of Ethiopia (CBE). Total credit growth remained around 25 percent year-on-year, while private-sector credit expanded by 50 percent year-on-year. Credit to the government grew by 0.3 percent, while lending to state-owned enterprises declined by 10 percent.
The IMF also said stronger gold prices and higher export volumes supported Ethiopia’s external position during the first half of the 2025/26 fiscal year, helping offset higher fuel import costs and supporting foreign-exchange availability.
Despite increased foreign-exchange supply, the report estimated that commercial banks were carrying an accumulated foreign-exchange backlog of about USD 1.4 billion at the end of April 2026.
The IMF said the NBE conducted 14 foreign-exchange auctions totaling USD 2.5 billion during the first 11 months of the fiscal year. It added that banking-sector foreign-exchange liquidity had improved, supported by remittances, foreign direct investment and NBE auctions, but interbank foreign-exchange trading remained “limited and episodic.” The report also said banks continued to cluster their bids in auctions and the exchange rates they offered to clients.
The report stated that all commercial banks remained within the NBE’s prudential limits on net open foreign-exchange positions as of the end of April.
According to data included in the review, banks submitted bids totaling approximately USD 1.06 billion in the NBE’s May 19, 2026 foreign-exchange auction, against USD 500 million offered by the central bank. The weighted average successful exchange rate was 159.63 birr per U.S. dollar, with successful bids ranging from 157.30 birr to 160.91 birr per dollar.
The IMF also said sustained efforts to improve foreign-exchange market functioning remain essential. It said the NBE plans to develop a roadmap to deepen the interbank foreign-exchange market by September 2026, continue conducting transparent foreign-exchange auctions, and adopt a plan to remove the remaining foreign-exchange surrender requirements.
In its assessment, the IMF also said that developing “a well-designed plan” for the NBE to improve its gold market operations and “eventually exit the gold market,” while remaining consistent with reserve accumulation objectives, would be important.
