NBE’s Gold Buying Spree Leaves a 40 Billion Birr Gap
Reserve money jumped 66pc as the central bank became the market’s dominant gold buyer
The National Bank of Ethiopia spent far more acquiring gold than it earned selling it last fiscal year, according to Fortune’s review of the Bank’s audited accounts. NBE booked 275.2 billion Br in gold sales against 315.6 billion Br in purchase, refining, and related costs, a shortfall of 40.3 billion Br. A year earlier, the gap was a fraction of that size, just 1.94 billion Br, on sales of 4.98 billion Br and costs of 6.92 billion Br.
The scale of the shift is the real story. Gold-sale revenue rose more than 55-fold in a single year while acquisition costs rose more than 45-fold, Fortune reported, as the central bank moved from a marginal buyer to the dominant one in the domestic market. Gold’s share of merchandise export earnings climbed to 41.7pc from 10.8pc over the same period.
The gold operation is also reshaping the money supply. Reserve money grew 66.4pc to reach 787.3 billion Br by June 2025, with NBE’s own reporting tracing much of that expansion to the gold-buying drive, per Fortune. Purchases from local miners are settled in cash, and currency in circulation rose 34pc, a pattern with direct implications for inflation management even as gold exports strengthen the country’s dollar position.
Context matters here. The 40.3 billion Br gold shortfall is not, on its own, what pushed NBE into deficit. Before unrealized gains and losses, the Bank actually posted an operating surplus of 16.7 billion Br; a 445.2 billion Br foreign-exchange loss is what dragged the year into a 428.6 billion Br operating deficit. The gold gap is one contributor to a much larger currency-driven story, not the deficit itself.
Why acquisition costs so heavily outpace sale proceeds is the open question Fortune’s reporting leaves unresolved, whether it comes down to the price NBE pays suppliers, refining and processing costs, sale timing, or how the Bank values gold still on its books.
At the center of the gap is a policy choice. NBE pays a premium above market-clearing prices to keep gold flowing through formal channels rather than the parallel market. The IMF has flagged this as a source of avoidable losses and pushed for a gradual move to market-based pricing, even while crediting rising global gold prices with offsetting some of the damage. NBE has held its ground; a senior Bank official confirmed to Fortune that the premium will not be lifted.
Independent analysis reaches a similar bottom line by a different route. An analyst at Pragma Capital told Fortune the Bank’s procurement and refining spend clearly outstripped its sales revenue, producing a net loss, even as the same program turned NBE into one of the country’s largest dollar earners, with gold exports reaching 5.5 billion dollars, trailing only Ethiopian Airlines. The same analyst warned that cutting the premium too abruptly risks pushing gold suppliers back into informal trading, and suggested tax relief for smaller gold producers as a way to offset any reduction.
The trajectory ahead is steep. NBE’s reserve and payment accounts have already grown from 197 billion Br to 448 billion Br, and Fortune noted that analysts expect total reserves to reach one trillion Birr next year if the buying pace holds. Whether that scale is sustainable, or whether the premium eventually gives way to market pricing as the IMF wants, will shape how much of the current strategy’s cost NBE is willing to keep absorbing.
Source: Fortune