National Bank of Ethiopia (NBE) to Exit Gold Market by End-2026, Private Banks Set to Enter

The National Bank of Ethiopia (NBE) is preparing to withdraw from direct participation in the country’s gold market by the end of December 2026, paving the way for private banks to engage in gold purchasing and export activities, according to the International Monetary Fund’s Fourth Review released this week.

NBE has long been the sole authorized buyer and exporter of gold in Ethiopia, purchasing the metal from domestic suppliers at prices that included premiums of up to 15 percent above international market rates. While the policy supported formal gold supply, the IMF said it resulted in significant financial losses for the central bank, weighed on its balance sheet, and distorted market dynamics.

Under the reform plan, the premium paid to miners will be gradually phased out, and private banks will be allowed to participate in gold purchases. A detailed implementation roadmap is expected to be finalized following a study scheduled for completion by the end of March 2026. In the interim, gold quality control measures will be strengthened through expanded and improved testing procedures across all purchasing sites.

The IMF said NBE will also develop a comprehensive long-term exit strategy from the gold market by the end of 2026, while carefully managing the implications for international reserve accumulation.

Ethiopia’s gold exports surged sharply in the past year, rising from just over four metric tons in 2023/24 to nearly 39 metric tons in 2024/25. Export volumes are projected to moderate to around 30 metric tons in 2025/26, largely due to the depletion of inventories accumulated during the Tigray conflict.

The IMF noted that recent swings in errors and omissions within Ethiopia’s external accounts are partly explained by the formalization of previously smuggled gold and the timing gap between NBE’s purchase of raw gold and the export of refined output. Efforts are underway, with IMF technical assistance, to improve the recording of gold transactions and reduce statistical discrepancies.

Despite these challenges, Ethiopia’s gross international reserves increased by three billion dollars to 4.4 billion dollars, supported by a strong export performance. Reserves are projected to reach 10.5 billion dollars by 2028, covering approximately 3.5 months of imports.

The report also highlighted rapid monetary expansion, with broad money growing 34 percent year-on-year by end-September 2025, driven largely by deposit growth at the Commercial Bank of Ethiopia. Reserve money expanded by 71 percent, reflecting liquidity injected through NBE’s gold purchase operations.

The IMF also stressed the importance of bolstering Ethiopia’s financial sector safety net. This strengthening is crucial as the economic landscape is expected to become more competitive with the impending foreign bank entry, accompanying the gold market reforms. Authorities have already established a formal bank resolution framework and issued a recovery plan directive, with plans to introduce a Prompt Corrective Action framework and finalize a bank merger and acquisition directive by March 2026.

The IMF concluded that Ethiopia’s capacity to repay the Fund has improved, supported by reform implementation and progress on debt restructuring, while cautioning that external shocks and commodity price volatility remain key downside risks.

Source: The reporter