Addis Abeba — Ethiopia's central bank, the National Bank of Ethiopia (NBE), has recorded losses equivalent to $2.6 billion following the country's shift from a fixed to a market-based foreign exchange regime in July 2024, according to audited financial statements cited by the Kenyan outlet The EastAfrican.
NBE said it incurred 407.1 billion birr in foreign exchange losses during the financial year ending June 30, 2025, largely due to the revaluation of its foreign currency assets and liabilities after the exchange rate realignment. Foreign exchange losses rose sharply to 445.23 billion birr, from 38.13 billion birr the previous year.
The surge pushed the National Bank of Ethiopia's overall operating loss to 428.56 billion birr, up from 10.51 billion birr a year earlier, and drove the Bank into a negative equity position of 380 billion birr, raising concerns over its ability to continue as a going concern.
In its audited financial statements, the National Bank of Ethiopia said the losses were "primarily attributable to unrealised net foreign exchange losses arising from the translation of the Bank's foreign currency assets and liabilities following exchange rate realignment."
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Ethiopia introduced the IMF-backed foreign exchange reform in July 2024, replacing decades of state-controlled exchange rates with a market-based system in which rates are determined by supply and demand as quoted by commercial banks. Under the new framework, non-bank entities are also permitted to operate foreign exchange bureaus.
NBE said the policy shift required it to translate its foreign currency assets and liabilities using an indicative mid-exchange rate based on the average market rates quoted by banks, resulting in an unrealised net foreign exchange loss of 445.23 billion birr.
The National Bank of Ethiopia also reported 57.2 billion birr in losses from gold sales and write-downs of gold inventories to net realisable value. According to the Bank, the losses reflect its high exposure to foreign currency-denominated assets and liabilities, including obligations to international financial institutions and foreign currency reserves.
Audit firm MSE Audit Service LLP, cited by The EastAfrican, identified foreign exchange losses as a key audit matter, warning that Ethiopia faces significant exposure to unrealised exchange losses that could crystallise when repayment obligations fall due.
"This exposure could exceed the paid-up capital and general reserve balances of the Bank when realised, necessitating strategic intervention to manage the risk and ensure the Bank's going concern status," the auditors said.
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The widening losses and negative equity position have intensified scrutiny over whether the National Bank of Ethiopia can meet its obligations as they fall due, amid pressure from the International Monetary Fund and the World Bank on Prime Minister Abiy Ahmed's administration to float the birr in return for financial support.
NBE said it is conducting a comprehensive capital assessment and policy solvency study to determine whether its capital base is adequate to support its mandate and to identify measures needed to safeguard financial sustainability during and after the reform period.
The National Bank of Ethiopia's authorised capital stands at 20 billion birr, with a minimum paid-up capital of 10 billion birr, which the government is legally required to maintain. In September 2025, NBE Governor Mamo Mihretu announced his resignation under unclear circumstances.
