Remittances Surge to USD 4.6bn as Inflation Falls to Single Digits

Ethiopia recorded a sharp rise in diaspora inflows during the first half of the 2025/26 fiscal year, with net private remittances increasing by 36.5 percent to USD 4.6 billion, according to a performance report released by the National Bank of Ethiopia (NBE).

The growth in remittances provided a significant boost to foreign exchange availability and contributed to a broader improvement in key macroeconomic indicators. The central bank reported that headline inflation fell to 9.7 percent, meeting its long-stated objective of achieving single-digit inflation after years of elevated price pressures.

 

Alongside stronger remittance inflows, Ethiopia recorded a notable buildup in foreign exchange reserves, supported by improved export performance and tighter monetary and fiscal coordination. NBE said the combined effect has helped stabilize the external sector amid continued reform of the foreign exchange regime.

The banking sector expanded in parallel with the macroeconomic improvements. Total bank deposits rose by 44.6 percent to 4.2 trillion birr, while total loans increased by more than 45 percent to 2.42 trillion birr. Lending remained heavily skewed toward the private sector, which accounted for 94.5 percent of total credit outstanding, reflecting policy efforts to support private-sector-led growth.

Digital financial services recorded particularly strong growth. The value of digital payments surged by 94 percent to 14.56 trillion birr, while the number of digital financial accounts increased by more than 20 percent, highlighting the accelerating shift toward cashless transactions and platform-based financial services.

The NBE said its policy focus in the coming period will remain on safeguarding exchange rate stability, strengthening external sector resilience, enforcing the reformed foreign exchange management framework, and deepening the digital financial ecosystem.

The central bank added that sustained remittance inflows, combined with disciplined monetary policy and continued digitalisation of financial services, will be critical to maintaining macroeconomic stability and supporting long-term economic growth.

Source: EBR