National Bank of Ethiopia; He decided to make monetary policy reforms to curb inflation.
Regarding this, the governor of the bank Mamo Mehretu made a statement today.
What points did you make in the statement?
– The board of directors of the National Bank has passed a decision to control the inflation in a meaningful way.
– Among the decisions, direct loans to the government will not exceed 1/3 of what was given last year.
– The government should first exhaust the option of treasury bills and use direct loans only when there is no other option.
– At the end of June of the fiscal year 2016, domestic credit growth will be limited to a ceiling of 14 percent. All commercial banks will adjust their credit growth plans based on this credit ceiling.
– When banks face a shortage of funds, the interest they pay on the loan facility from the National Bank will be increased from 16 percent to 18 percent.
– In order to encourage key export sectors, especially exporters engaged in the manufacturing sector, the previous obligation to transfer foreign currency will be improved from 70/30 to 50/50. It has been decided that exporters should deposit 50 percent to the National Bank, 10 percent to their partner banks and 40 percent for themselves.
– By the end of the 2016 fiscal year, the inflation will be below 20 percent and in the 2017 fiscal year, it will be reduced to below 10 percent.
The public has been called upon to support the decision to control the inflation.