APA-Addis Ababa (Ethiopia) The National Bank of Ethiopia (NBE) has announced that it has revised some of its monetary and fiscal policies as part of an effort to address rising inflation in the country.
NBE in a statement on Saturday said it has put in place limits on credit growth for the current 2023/24 fiscal year to counter its inflationary impact.
“A significant credit expansion of the past year has undermined progress in reducing inflation,” the NBE said in a statement today.
The central bank has now moved to put in place limits on credit growth both in credit to the government and the private sector, effective as of today.
The central bank has now moved to put in place limits on credit growth both in credit to the government and the private sector, effective as of today.
The bank said it has increased the amount of forex that exporting firms can retain for their export commodities from 30 to 50 percent to contain the rising inflation.
“The bank has revised its ‘forex render requirement’ in a bid to encourage exporters particularly those who are engaged in the manufacturing sector as one of its monetary measures to contain ever rising inflation,” it said.
Accordingly, the amount of forex to be retained by the eligible exporters will increase to 50 percent from 30 percent now and the exporters will settle 40 percent of the total forex to the national bank while the balance 10 percent will go to the banks they work with.
The country’s macro economy has faced multiple challenges including income deficit, economic imbalance and high inflation, the statement said adding the government will work hard to reduce the stated problems through cutting the loan it could borrow from commercial banks especially from the central bank.
The bank said it will introduce a policy whereby it can limit the growth of the government’s expenditure so as to reduce the budget deficit against the gross national product.
It said currently the inflation rate in Ethiopia has hit more than 30 percent and the situation has badly affected the lives of fixed and low income earning groups of the society, aggravated social, economic and political risks and caused macroeconomic imbalance.
MG/as/APA