Private sector lending in Ethiopia was already growing at twice the official credit limit before the central bank scrapped its lending cap this week, raising fresh questions about how effective the policy had become.
Read also: Ethiopia scraps bank lending cap as central bank tightens grip on inflation
A new review by the International Monetary Fund (IMF) shows that credit to the private sector expanded by 50 percent year on year by the end of March 2026, even though commercial banks were operating under an annual credit growth ceiling of 24 percent introduced to curb inflation and excessive money supply growth.
The findings offer fresh insight into why the National Bank of Ethiopia (NBE) moved this week to abolish the cap and replace it with interest rates and bank specific reserve requirements as its main monetary policy tools.
While private lending surged, overall credit growth remained more contained because lending
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