In the beginning of September 2025, Mamo Mihretuannouncedhis resignation from the position of Governor of the National Bank of Ethiopia (NBE), concluding a period of seven years in high-level economic positions. Two weeks following Mamo’s exit, Prime Minister Abiy AhmedappointedEyob Tekalign (PhD) has been appointed as the new Governor of the NBE. Eyob, who previously held the position of State Minister in the Ministry of Finance and previously headed the National Planning Commission, has over 18 years of experience covering government, the private sector, multinational companies, supranational bodies, and higher education. His professional history showcases a mix of technical knowledge and policy development skills, which prepares him to handle Ethiopia’s intricate economic issues.
Eyob takes charge during a crucial moment. Ethiopia, which is home to more than 120 million individuals, is facing significant inflation, limited foreign currency availability, unstable exchange rates, payment imbalances, insufficient reserves, and fundamental structural issues within its financial system. In this context, Eyob’s selection can be seen as a chance to redefine the nation’s macroeconomic strategy. The choices he makes in the coming months and years will be essential in deciding whether Ethiopia can stabilize its economy, regain investor trust, and establish a sustainable route for future growth.
High stakes, hard choices
In recent years, the NBE has encountered major difficulties in maintaining economic stability. Inflation has often gone beyond double digits, and foreign exchange reserves have been consistently decreasing. These disparities have limited the growth of the private sector, discouraged foreign direct investment, and weakened trust in the banking system. At the same time, the swift growth of commercial banks, fintech companies, and remittances from the diaspora has increased the need for thorough regulatory updates and enhanced supervision.
These significant macroeconomic issues require Eyob to take charge of the NBE with a defined, reform-focused approach, integrating bold policy measures with strategic management to bring back stability, enhance institutional trust, and lead the nation toward long-term economic growth.
Well-known for his analytical precision and practical mindset, he has always highlighted the significance of fiscal restraint, changes in exchange rates, and the expansion of Ethiopia’s financial system. His selection arrives at a critical time: Ethiopia is nearingthe last phases of discussions regarding debt restructuring within the G20 Common Framework, and the existence of a reliable, efficient central bank is crucial for rebuilding both domestic and international trust. In this regard, a powerful and dependable central bank is not just advantageous but necessary for restoring both domestic confidence and international reputation.
Inflation is not just an economic figure—it acts as an invisible tax on those in poverty, reducing the buying capacity of families who are already facing higher costs for food and necessary items. Sharp increases in prices reduce the worth of savings, cause wages to lag, and introduce uncertainty that hinders investment choices. Ethiopia cannot build a solid base for long-term growth until inflation is managed effectively.
Although officials have reportedthe economy has shown significant improvement in the last two years—pointing to a drop in the 12-month moving average inflation rate from 34.5% in August 2022 to 16% in June 2025—yet many analysts are still doubtful. Even with actions like implementing a market-driven exchange rate, foreign currency reforms, and continuous debt renegotiation, inflation remains firmly in the double digits, prompting doubts about the success of current strategies and the reliability of official data.
It is within this specific context that the newly appointed Governor of the NBE should prioritize price stability as the central focus of his responsibilities. At this crucial moment, the credibility of the central bank—and consequently, the trust of both local residents and global partners—depends largely on its capacity to achieve and maintain low, consistent inflation. Without this foundation, even the most carefully planned reforms may fail to take hold.
His [Eyob’s] leadership arrives at a moment when Ethiopia’s economy desperately requires confidence and stability.
In this regard, adopting a more stringent monetary policy should be a key priority for the new governor’s plan. In real terms, this means reducing the growth of money and credit in the economy. For Ethiopia, this might include increasing policy interest rates to limit borrowing and encourage saving, as well as imposing limits on credit expansion to ensure that banks direct loans towards productive investments instead of speculative ventures. Instead of removing the credit limit on banks completely,the central bank raised the credit growth cap for the private sector earlier this weekFrom 18% to 24%. I agree with this choice, as removing the limit entirely at this moment might not be wise given the current economic weaknesses.
Other steps involve controlling liquidity via open market activities and increased reserve mandates, as well as influencing the exchange rate to align with market conditions while avoiding significant decline that might intensify inflation.
Nevertheless, none of these corrective actions are without expense. Companies will face increased borrowing costs, families will encounter more restricted access to credit, and economic growth could slow down in the short run. However, these temporary challenges need to be considered against the much more severe outcomes of uncontrolled inflation—declining savings, distorted price indicators, reduced investment, and heightened inequality.
Navigating economic crossroads
It is exactly due to the high stakes that Eyob’s assumption of leadership at the NBE occurs at such a crucial time. The choices made in the next few months will not only influence the direction of monetary policy but also decide if Ethiopia can move from instability to stability, setting the stage for long-term, inclusive growth.
The immediate result of a more restrictive monetary policy is a slowdown in demand. Certain investment initiatives might be delayed, and families are expected to cut back on non-essential expenses. This is, indeed, the desired outcome: to ease the upward trend in prices. As inflation expectations stabilize over time, the wider advantages become apparent—enhanced buying power for consumers, a more consistent local currency, and increased trust from both local and foreign investors.
That being said, the boundaries of monetary policy should be recognized. In Ethiopia, a large part of inflation is caused not by excessive demand but by supply-side challenges—especially unstable food prices. Increasing expenses for imported fuel and fertilizers, transportation obstacles, and limited agricultural output all play a major role in pushing prices upward. Simply raising interest rates will not address these underlying problems. For monetary tightening to have real impact, it needs to be supported by specific supply-side improvements in agriculture, energy, and transportation infrastructure.
For this approach to be effective, three key foundations—rooted in professional discipline and organizational honesty—are crucial. First, clear objectives. The NBE needs to define specific, time-limited inflation goals—like reducing inflation to 10% within two years—and stick to them without deviation. These goals should be grounded in actual economic data, not political influences, and should mirror real market conditions instead of idealistic stories.
Secondly, openness and forward-looking communication. The NBE is obligated to clearly articulate its policy choices to businesses, families, and financial markets. Consistent, prompt public reports on economic conditions—released prior to external analysts or international organizations commenting—will assist in setting expectations and avoid unwarranted alarm. In this capacity, the NBE should establish itself as the country’s most reliable provider of economic insights. Its internal economists need to create and distribute top-notch, evidence-based evaluations that encourage thoughtful public discussion and enhance policy responsibility.
Third, ensure strong collaboration with fiscal policy. Monetary tightening could be weakened if fiscal policy continues to be expansionary. Uncontrolled government spending, particularly when funded directly by the central bank, contributes to inflation and weakens the credibility of monetary policy. Therefore, the Ministry of Finance should support macroeconomic stability by limiting the budget deficit and avoiding borrowing from the central bank.
In addition to these immediate concerns, Ethiopia needs to improve its financial framework. Establishing more robust interbank markets and a more liquid government securities market would improve the efficiency and impact of monetary policy instruments. Meanwhile, supply-side efforts—like increasing local food production, simplifying transportation networks, and enhancing export capabilities—should progress alongside maintaining monetary control. Only with this combined strategy can Ethiopia attain long-term price stability and create the basis for strong, inclusive growth.
Although Eyob’s selection holds considerable potential, the dangers of overreaching, political involvement, and organizational fragility should not be overlooked.
Eyob’s selection occurs at a pivotal moment. He takes over an economy that has shown noticeable improvement but is still highly vulnerable: external challenges keep presenting major dangers, food price fluctuations remain high, and public tolerance—already weakened by years of economic struggle—is limited. His responsibilities go beyond the technical aspects of monetary policy, such as increasing interest rates or limiting credit expansion. Equally important will be his capacity to convince Ethiopians that the temporary discomfort caused by tightening measures is essential for achieving long-term macroeconomic stability. This will not be a straightforward task, especially considering previous instances where similar actions did not provide the expected relief, resulting in widespread doubt about renewed demands for austerity.
What distinguishes the new governor is the wide range of his experience: his professional journey combines thorough academic education in economics with practical involvement in top-tier policy development. This combined foundation enables him to not only possess the analytical skills to create effective, data-driven strategies but also to have the political insight required to manage Ethiopia’s challenging and frequently uncertain policy landscape.
I am convinced that the combination of his technical knowledge, reform background, and global experience sets him apart to guide the nation through the complicated journey of financial modernization. His successful history in challenging negotiations and institutional changes indicates he has the patience and honesty needed to restore that trust.
At this point, Ethiopia’s financial sector reforms need more than just courageous vision—they necessitate careful implementation, consistent communication, and a thorough grasp of local conditions. In my view, Eyob’s previous positions have provided him with exactly the insight, wisdom, and expertise required to achieve this fine balance and guide the country toward a more stable and equitable economic future.
Examples from other African nations, including Ghana and Kenya, show that effective leadership within central banks can significantly contribute to achieving macroeconomic stability in difficult times. For instance, Ghana’s central bank managed a debt crisis effectively through the implementation of transparent and firm inflation-control strategies. Ethiopia can benefit from these examples, adopting a comparable strategy that combines fiscal and monetary responsibility with creativity to establish a lasting route towards economic stability and development.
The previous leader, Mamo Mihretu, introduced several reforms, yet most remained unfinished or not fully established. Eyob now has the chance to develop upon these base foundations. His leadership arises at a moment when Ethiopia’s economy urgently requires trust and stability. Should he manage to restore confidence in monetary policy and successfully steer reforms, Ethiopia’s financial system might ultimately serve as a catalyst for inclusive growth, higher investment, and greater participation in global markets.
Balancing reform, reality
Although the new governor offers significant experience to the role, his selection is not free from difficulties. The NBE has traditionally been susceptible to political interference, and even a governor committed to reform might encounter pressure to focus on immediate political goals rather than long-term economic security.
Another major issue is the ability to carry out policies effectively. Ethiopia’s financial sector reforms—ranging from digital changes to the growth of the capital market—demand strong regulatory bodies, modern technology, and well-trained experts. Although the governor has a clear vision and knowledge, effective execution will rely on improving the NBE’s internal skills, which are still insufficient.
Additionally, Eyob’s strong ties to the government, while beneficial for policy collaboration, could lead to concerns regarding the central bank’s autonomy. Investors and foreign partners will be carefully observing whether the NBE, under his direction, can function independently to ensure price stability and strengthen financial solidity.
Throughout history, reforms have consistently resulted in both beneficiaries and those who suffer. Opening up the banking industry could pose difficulties for local banks that are not ready for heightened competition, while enforcing stricter monetary policies to control inflation might create temporary hardships for businesses and families. The way the new governor manages these social and political challenges will be just as important as the technical choices he makes.
Although Eyob’s selection holds considerable potential, the dangers of overreaching, political involvement, and weak institutions should not be overlooked. His effectiveness will rely on maintaining a delicate equilibrium between change and practicality, safeguarding the central bank’s reputation.
This instant, therefore, goes beyond a mere shift in leadership. It presents a chance to reshape the NBE’s role in influencing the nation’s economic direction. For regular people, hope is found in a stable currency, reasonable costs, and wider availability of financial services. For companies, the opportunity arises through a more consistent and open financial setting. And for the government, it provides a fresh opportunity to synchronize fiscal and monetary policies in the quest for common prosperity.
The burden of transforming an institution and influencing Ethiopia’s economic future lies with Eyob. His achievements will be judged not solely by financial metrics, but by the confidence he builds and the prospects he offers to countless Ethiopians.AS
Editor’s NoteAbreham Tesfaye is a consultant and trainer who focuses on change management, sustainability, and transformational leadership. He has over 15 years of experience within Ethiopia’s financial industry, working in both government organizations and private banks, moving up from a junior officer role to become a vice president. Abreham can be contacted at[email protected]
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