SUPPORT ETHIOPIA INSIGHT
Mamo Mihretu’s sudden departure exposes the fragility of reform.
When Ethiopia’s central bank governor, Mamo Mihretu, announced his resignation two weeks ago, it might have sounded routine. Yet in a fragile economy under IMF supervision, the sudden exit of a central banker is never ordinary.
Such figures are not just administrators; they are central to sustaining confidence in economic reforms and external financing. For Ethiopia, this is especially true, as the National Bank of Ethiopia sits at the center of efforts to stabilize a debt-laden economy, manage scarce foreign exchange, and steer a difficult program of fiscal tightening.
What made the development even more striking was the contradictory narratives. Mamo stated that he had resigned, while the Prime Minister’s Office released a short statement that read more like a dismissal. That dissonance suggests more than a smooth transition.
It points to uncertainty at a sensitive moment, when the credibility of reforms depends as much on perception as on performance. In the middle of an IMF program, where donor confidence shapes the availability of lifeline financing, even small ambiguities carry significant weight.
Examining Achievements
In his farewell letter, Mamo highlighted what he called his key achievements: foreign exchange reserves “tripled,” $10.5 billion in external financing secured, inflation reduced, and macroeconomic stability restored. On the surface, these are impressive claims. But each requires closer scrutiny.
Reserves did expand under his tenure, but the source was external inflows rather than stronger trade performance. Ethiopia’s merchandise exports declined from $4.1 billion in 2022 to $3.6 billion in 2023 and $3.8 billion in 2024.
By contrast, the IMF disbursed $1.9 billion between July 2024 and July 2025, while the World Bank delivered $1.5 billion in budget support in 2024 and committed an additional $6 billion over 2024–27. These flows exceeded Ethiopia’s annual exports. The “tripled reserves” headline is therefore accurate in nominal terms but rests on borrowed cushions rather than earned surpluses.
A similar dynamic applies to inflation. It did fall from 34 percent in 2022 to 21 percent in 2024, but the decline was largely a product of austerity. Broad money as a percent of GDP dropped from 31 percent in 2021 to 21 percent in 2024, while the fiscal deficit narrowed from nearly 4 percent of GDP in 2022/23 to 2.5 percent in 2023/24, mainly through subsidy cuts and spending restraint.
The governor also pointed to $10.5 billion in external financing as a major achievement. While the figure is significant, it represents debt rather than income. These emergency loans are tied to IMF program performance and will require repayment, meaning they cannot be counted as permanent resources.
Finally, price stabilization has to be understood in context. Inflation eased partly because households could no longer afford to buy. In 2024, 92 percent of low-income families in Addis Ababa were food insecure, many skipping meals or reducing diet quality. Nationally, the World Food Programme estimated 10.9 million people acutely food insecure in mid-2024. Prices stabilized not because production expanded, but because consumption collapsed.
Taken together, the claim of “restored stability” appears overstated. Ethiopia’s economy remains characterized by falling real incomes, high unemployment, and persistent conflict-related disruptions. Liquidity has improved, but solvency and resilience have not.
Credibility Crisis
Mamo was not just another technocrat. He began his career as an advisor to the Prime Minister and was a chief architect of Ethiopia’s “Home-Grown Economic Reform.” His exit, therefore, is significant for both political and technocratic reasons.
At minimum, the departure of the figure most closely associated with Ethiopia’s reform program introduces uncertainty. Whether initiated by him or by the government, the change at the helm will be read by external partners as a sign of fragility at a sensitive juncture.
For the IMF and Ethiopia’s external partners, the governor’s exit complicates matters. Central bank governors are both policy managers and symbols of reform credibility. A sudden change in leadership risks raising doubts about Ethiopia’s political commitment to the program and the continuity of policy implementation.
Donors and lenders were already questioning whether Ethiopia’s reforms delivered more than painful austerity. With Mamo’s departure, those questions will grow sharper: Is the government recalibrating its reform strategy, struggling with implementation, or simply rotating personnel?
Whatever the reason, credibility has taken a hit. Negotiations for further disbursements or debt relief will now take place under a cloud of uncertainty.
Shifting Ground
The appointment of Eyob Tekalign last Friday as the new governor is unlikely, on its own, to restore confidence. A former board member who played a central role in Ethiopia’s debt negotiations with donors, Eyob brings relevant experience to the post.
Yet he inherits a formidable challenge: Securing IMF and donor support while addressing the social costs of austerity in a population battered by years of conflict, inflation, and unemployment.
The departure of a figure so closely tied to the government’s reform agenda underscores how delicate that task has become. Rather than closing a chapter, the exit highlights the unsettled nature of Ethiopia’s economic adjustment.
Progress has been made in stabilizing headline indicators, but underlying vulnerabilities persist. The task for policymakers now is to show that reform can move beyond temporary buffers and austerity toward building the foundations of a lasting recovery.
Query or correction? Email us
While this commentary contains the author’s opinions, Ethiopia Insight will correct factual errors.
Main photo: Outgoing Governor of the National Bank of Ethiopia, Mamo Mihretu (right), with newly appointed Governor, Eyob Tekalign Tolina. 21 September 2025. Source: AMN-English.
Published under Creative Commons Attribution-NonCommercial 4.0 International licence. You may not use the material for commercial purposes.
Funny how certain unknown Mamo can be an issue here while the architect himself is at the helm.