Ethiopian Central Bank Replaces Lending Cap with Targeted Reserve Policy

Ethiopia's National Bank of Ethiopia (NBE) has replaced its lending cap with a targeted reserve policy. This new policy follows a December 2025 directive that increased the minimum reserve ratio from seven to ten percent by June 30, 2026. The NBE Governor noted that the loan-to-deposit ratio of private banks improved to 72.7 percent from 90.3 percent in the 2022/23 fiscal year, indicating better liquidity management in the banking sector.