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Two years of the float.
On 29 July 2024, the National Bank of Ethiopia ended fifty years of state-fixed exchange rates and let the birr trade on the market. What followed was a $3.4 billion IMF programme, a still-growing series of dollar auctions, a fledgling forex bureau industry, and a currency that has lost most of its value while reserves and reform credibility slowly rebuild. This report tracks it all — reform by reform, auction by auction.
The birr’s slide, official vs. street
The official (auction-referenced bank) rate and the parallel/bureau rate ran together in the reform’s first days, then diverged. The gap has narrowed and widened repeatedly as NBE liquidity and directives shift. Hover the line for readings.
Timeline of activity since the float
Every major reform, IMF review, auction milestone and forex-bureau decision, in order. Filter by category to isolate one thread of the story.
The IMF Extended Credit Facility, review by review
Approved the same day the birr floated, Ethiopia’s 48-month, $3.4bn ECF programme disburses in tranches tied to twice-yearly (now roughly six-monthly) reviews of the Homegrown Economic Reform Agenda (HGER).
NBE dollar auctions
Since Auction No. 1 on 7 August 2024, the National Bank of Ethiopia has sold dollars to commercial banks on a roughly biweekly cycle — the main channel through which the “market-based” rate is actually discovered.
Major economic policies adopted
The float was the headline move, but it sat inside a wider Homegrown Economic Reform Agenda (HGER) — the package the IMF and World Bank actually financed.
Currency float
Replaced NBE-determined rates and current-account restrictions with a market-based, bank-quoted exchange rate.
IMF Extended Credit Facility
48-month, $3.4B programme financing the Homegrown Economic Reform Agenda, disbursed in tranches against twice-yearly reviews.
Fuel & commodity subsidy reform
Reduction of subsidies on fuel and select commodities, part of the fiscal conditions attached to IMF/World Bank support.
Privatization drive
Partial or full privatization of state-owned enterprises, including stakes in Ethio Telecom and other service providers.
Banking sector opened to foreign banks
Foreign banks permitted to enter the Ethiopian market for the first time, part of financial-sector liberalization.
Independent forex bureau licensing
First private, non-bank cash-exchange bureaus licensed under Directive FXD/01/2024, alongside commercial banks.
Bank bid-ask spread cap
NBE caps the spread banks can charge between buying and selling rates at 2%, to improve price transparency.
Franco Valuta ban
Banned an informal import-financing workaround that let importers bypass the formal forex system.
Monetary policy overhaul
Shift from direct credit controls toward interest-rate-based monetary policy to help contain inflation.
Net open FX position limits
Enforcement of limits on banks’ net open FX positions, part of IMF-backed efforts to deepen and discipline the FX market.
Zero off-auction FX intervention rule
New IMF performance criterion barring NBE from intervening in the FX market outside the formal auction system.
‘Mattress money’ liberalization directive
Eases deposit and documentation requirements to draw diaspora and informally-held cash into the formal banking and forex system.
Debt restructuring under Common Framework
China debt-service suspension, Paris Club agreement, and a July 2025 Official Creditor Committee MOU; Eurobond talks with private bondholders remain unresolved.
Planned NBE exit from gold market
IMF’s 5th review calls for a well-designed plan for NBE to eventually step back from direct gold-market operations as reserves recover.
Interbank FX market development
Ongoing push to build a functioning interbank market and relax remaining exchange restrictions, per successive IMF reviews.
Forex availability & the bureau system
Three tiers now exist side by side: commercial banks selling at the auction-referenced official rate, a small licensed independent-bureau sector, and an informal/parallel market that still prices dollars highest of all.
| Milestone | Date | Detail |
|---|---|---|
| Directive FXD/01/2024 issued | Jul 2024 | Sets terms for private, non-bank forex bureaus: Ethiopian-national ownership, Birr 15M minimum capital, Birr 30M blocked security deposit. |
| First licensing wave | Sep–Oct 2024 | Five bureaus licensed: Dugda Fidelity, Ethio Independent, Global Independent, Robust Independent, Yoga Forex Bureau. |
| Licensing paused | Late 2024 | NBE stops processing new applications to evaluate the first cohort’s performance before expanding the sector. |
| Second licensing wave | Oct 2025 | Five more non-bank forex bureaus granted operational licenses, roughly doubling the sector. |
| “Mattress money” liberalization directive | Feb 2026 | Removes minimum forex-account deposit, eases customs declaration below $10,000, simplifies medical/education FX payments — aimed at pulling diaspora and informal cash into formal channels. |
Where things stand, mid-2026
Two years on, Ethiopia has traded a fixed, overvalued birr and chronic dollar shortages for a market-based rate that keeps depreciating, an IMF programme that is roughly three-quarters disbursed, and a foreign-exchange market that is deeper — but still thin and fragmented across banks, bureaus and the street.
