In his comprehensive address to the Standing Committee of Planning, Budget, and Finance of the House of peoples Representatives, Governor Mamo Mehretu of the National Bank of Ethiopia outlined a strategic plan aimed at curbing inflation below 20 percent by the close of the current Ethiopian budget year. The governor reported tangible progress resulting from the monetary policy reform measures implemented by the National Bank to combat inflation.
Governor Mamo highlighted the global economic deceleration attributed to both natural and man-made disasters, underscoring their adverse effects on Ethiopia's economic landscape. He noted a decline in financial support from developed nations to developing countries, including Ethiopia, leading to inflationary pressures.
Despite these challenges, Governor Mamo Mehretu assured the committee that the National Bank is actively engaged in implementing various monetary policy reforms. These reforms include efforts to restrict domestic credit growth to a 14 percent ceiling and a commitment from the government to significantly reduce reliance on loans from the National Bank to cover budget deficits. Additionally, banks are encouraged to independently address their budget shortfalls.
The governor's dedication to the inflation reduction target was emphasized, pointing out a substantial decrease from over 30 percent to 27.7 percent in September. This positive development reflects the efficacy of the monetary policy measures and the National Bank's commitment to stabilizing prices.
Governor Mamo Mehretu also unveiled plans for a comprehensive overhaul and re-establishment of the central bank, signaling a pivotal moment in Ethiopia's financial regulatory landscape. This proposed bill, currently in preparation, showcases a commitment to modernizing and fortifying the central bank's role in the country's economic framework.
The governor's address emphasized the intricate challenges faced by Ethiopia's macroeconomic conditions, highlighting the urgency of concerted efforts to ensure stability. Governor Mamo's commitment to these reforms reflects a strong determination to address economic challenges and foster enduring stability in Ethiopia's financial sector.
By Wegayehu Muluneh