Ethiopia’s Central Bank Governor Says The 10.5 Billion Birr Loss “Ordinary Bookkeeping Issue”

Mamo Mihretu argues that the Media understood audit finding in a wrong way

Borkena

Toronto – Governor of Central Bank of Ethiopia Mamo Mihretu has presented 11 months performance report of the bank for the plan, finance and budget affairs standing committee in the Ethiopian Parliament.

He was asked for an explanation about the 10.5 billion birr loss reported by external auditors the Bank hired this year. 

Mamo tends to think that there was a misconception by the media and public. He argues, as heard from an audio content the Reporter shared on its news coverage, that the reported loss was “unrealized loss.”

The audit covered a three year period and what was indicated as a loss is a “record from before the introduction of the reform [a reference to  the macroeconomic reform introduced in July 2024]  and what was recorded after the reform. 

He contended that there was no loss to the bank due to a loan lent to the government or private banks but not repaid. He argued that the government and banks are paying back their  debts. 

Mamo described the 10.5 billion birr loss that made a headline among Ethiopian media in the past few days as an “ordinary bookkeeping issue.”   He painted the loss largely as something that happened due to the difference in the exchange rate . 

He added “what the media and the public needs to understand is that the National Bank is not a for profit bank like other banks.” 

Another image that the government projected, through Mamo Mihretu,  to the standing committee, and to the public as well, is that losses are very “common” to central banks. He highlighted examples from the experiences of other countries like the United States. Some sources seem to relate central bank losses to changes to monetary policy including adjustment to interest rates due to inflation but Ethiopia’s case does not appear  to be one related to adjustment to inflation. 

On the other hand, the governor was making claims that the macro-economic reform ( Ethiopia currency has lost more than 100 percent of its value in a matter of six or so months) introduced in July 2024 has yielded “encouraging results.” 

The change in the forex exchange regime has resulted in “tangible results,” he told the parliamentary committee. 

Notably, earlier this week the bank announced a decision allowing  foreign banks to enter the Ethiopian market which he says has “significance” in terms of attracting investors and for the “growth of the capital market” in Ethiopia. 

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