The National Bank of Ethiopia Governor provided a detailed briefing to the Parliament’s Plan, Budget, and Finance Standing Committee covering: (1) the central bank’s 3-Year Strategic Plan; (2) the year-ahead work program, and (3) performance for the first quarter of the current fiscal year.
NBE’s 3-Year Strategic Plan aims to: (1) ensure price and external stability; (2) maintain financial stability; (3) promote financial inclusion, deepening, and digitization; (4) establish excellence in its people, processes, and technology; and (5) strengthen governance.
The Governor reported encouraging early signs from recent monetary policy measures—which included setting an inflation target (20% by June 2024 and 10% by June 2025), moderating credit growth, and sharply reducing the level of Direct Advances to the Treasury.
The Governor highlighted a 2x increase in branches, a 3x increase in deposits, a 4X increase in account numbers, and a 5X increase in total credit between June 2018 and June 2023. Banks’ performance on NPLs, liquidity ratios, and capital adequacy were adequate across the sector.
Major advances were also noted in the growth of credit to the private sector (now 62% of the stock of bank loans and 86.2% of new loan disbursement) and in digital payments, which have tripled over the past fiscal year from Birr 1.6trn to Birr 4.8trn.
Looking ahead, the Governor noted key reforms include revisions in the NBE Establishment Proclamation (to strengthen NBE’s relative autonomy) and in the Banking Business Proclamation (to allow foreign entry), as well as the set-up of an Independent Insurance Regulator.
The Standing Committee broadly supported the NBE’s Strategy Plan and its recent monetary policy measures aimed at reducing inflation, while also encouraging continued and further work on ensuring financial sector stability, deepening, and inclusion.
