Mamo Mihretu Resigns as Governor of the National Bank of Ethiopia: A Legacy of Reform and Transformation

Legacy of Reform

Under Mihretu's stewardship, the NBE embarked on a series of bold reforms:

• Market-Based Exchange Rate: In a landmark move, the NBE transitioned to a market-based exchange rate system, floating the Ethiopian birr and allowing market forces to determine its value.
• Financial Sector Liberalization: Mihretu championed the opening of Ethiopia's banking sector to foreign competition. In December 2024, Ethiopia's parliament passed legislation permitting foreign banks to operate in the country, allowing them to set up subsidiaries, branches, or representative offices, with a foreign ownership cap set at 40%.
• Digital Payments Expansion: The adoption of digital payment systems saw a tenfold increase, enhancing financial inclusion and modernizing the payment landscape.
• External Financing: Mihretu played a crucial role in securing $10.5 billion in external financing from international partners, including the International Monetary Fund (IMF) and the World Bank, bolstering Ethiopia's economic stability.
• Inflation Control: Inflation, which had been in double digits for several years, declined to 10% in the 2025/2026 fiscal year, the lowest in a decade, attributed to the comprehensive economic reforms implemented during his tenure.

A Strategic Departure

In his resignation statement, Mihretu expressed gratitude to Prime Minister Abiy Ahmed and his colleagues, emphasizing his confidence in the continued growth of Ethiopia’s central banking system.

He stated, "After seven years of dedicated public service in different capacities, the time has come for me to leave government to pursue other passions and tackle other challenges."

The Prime Minister’s office has not provided further comments on the resignation, leaving the circumstances surrounding his departure open to speculation.

The Future of the National Bank of Ethiopia

As Ethiopia navigates the post-Mihretu era, the focus shifts to the future leadership of the NBE. The appointment of a new governor will be crucial in sustaining the momentum of the reforms and addressing the challenges that lie ahead. Key priorities for the incoming leadership will include:

• Strengthening Central Bank Independence: Ensuring that the NBE operates free from political interference to maintain credibility and investor confidence.
• Enhancing Financial Inclusion: Expanding access to financial services, particularly in underserved rural areas, to promote inclusive economic growth.
• Managing Inflation and Exchange Rates: Continuing efforts to control inflation and stabilize the exchange rate amidst global economic uncertainties.
• Attracting Foreign Investment: Building on the liberalization of the banking sector to attract foreign direct investment, which is vital for economic development.

The appointment of the next governor will be a defining moment in Ethiopia's economic trajectory, and stakeholders will be closely watching to see who will take up the mantle of leading the NBE through the evolving economic landscape.

Mamo Mihretu's resignation marks the end of a transformative chapter in Ethiopia's economic history. His tenure as Governor of the National Bank of Ethiopia was characterized by bold reforms and a vision for a modern, liberalized economy. As the country looks to the future, the legacy of Mihretu's leadership will undoubtedly influence the path forward for Ethiopia's financial sector.