Ethiopia’s Inflation Falls 17 Points to 13% After Adopting Market-Based Forex System

Ethiopia has recorded a significant drop in inflation—from 30% to 13%, since adopting a market-based foreign exchange regime for the first time in five decades. The milestone was revealed during the 2025 IMF–World Bank Spring Meetings, where National Bank of Ethiopia (NBE) Governor Mamo Mihretu discussed the government’s sweeping macroeconomic reforms with IMF African Department Director Abebe Aemro Selassie.

The reform package, part of Ethiopia’s Homegrown Economic Reform Program—includes a transition to interest rate-based monetary policy, the cessation of central bank financing of the government, and the introduction of open market operations. According to Mamo, these changes are already bearing fruit.

“We’ve prioritized price stability, strengthened policy transparency, and tripled our foreign currency reserves,” he noted. “For the first time in 50 years, Ethiopia is operating under a market-based forex system.”

The shift comes amid broader efforts to unlock private sector growth, expand access to credit, and enhance the competitiveness of Ethiopian exports. Backed by a $3.4 billion IMF credit facility, the government is also tackling debt vulnerabilities and reforming state-owned enterprises to create a more sustainable and investment-friendly economy.

Analysts suggest the reforms could mark a turning point for Ethiopia’s economic trajectory—positioning it as a more attractive destination for both local and foreign investors.

“Our goal is a stable, job-creating economy anchored in market discipline and inclusive growth,” Mamo emphasized.