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Ethiopia’s National Bank Governor Resignation :Did He Save the Economy or Sell It Out?

Ethiopia long paraded itself as Sub Saharan Africa’s fourth largest economy yet much of that strength was built on an overvalued birr and a parallel market that told a very different story. By floating the currency, Mamo Mihretu forced the nation to confront its economic reality. His resignation now leaves Ethiopia at a crossroads: rebuild the illusion, or endure the pain of real reform.

Gemechu Birehanu
5 min read
Ethiopia’s National Bank Governor Resignation :Did He Save the Economy or Sell It Out?

The resignation of Mamo Mihretu, Governor of the National Bank of Ethiopia, is more than a change of personnel. It is a turning point in Ethiopia’s fragile experiment with reform and a moment to ask what kind of economy we have really been living under. For some, Mihretu will be remembered as the bold reformer who did the “hard but necessary” work: floating the birr, opening finance to foreign players, securing billions in IMF financing, and rewriting the rules of Ethiopia’s monetary regime. For others, he will be branded a sellout to IMF dictates, who traded short-term stability for punishing inflation and external approval. But this debate, while valid, risks missing the bigger truth: Ethiopia’s economic story has been a lie for far too long.

The Mirage of “Sub Saharan Africa’s Fourth Largest Economy

For years, Ethiopia touted itself as the fourth largest economy on the SSA continent. But much of that claim rested not on real productivity or wealth creation, but on an overvalued currency. At one point before a year, the official exchange rate stood at 57 birr to the dollar, while the parallel market traded above 100 birr. That gap was not just a technical detail. It was the system.

  • Elites and favored traders accessed dollars at the cheap official rate, pocketed arbitrage profits, and accumulated wealth.
  • The public saw lower inflation than might have otherwise occurred, but without genuine prosperity or capital accumulation.
  • GDP figures, expressed in inflated dollar terms, exaggerated Ethiopia’s global ranking while concealing structural weaknesses. The result was a dual illusion: a government claiming growth that wasn’t real, and a society cushioned by artificial stability but excluded from true wealth creation.

Mamo’s Gamble

Into this broken system stepped Mamo Mihretu. His reforms most notably floating the birr in 2024 tore away the façade. Overnight, the official economy’s inflated size shrank closer to reality. Reserves stabilized, IMF funds flowed in, and the forex market became more transparent. But the cost was immediate: higher inflation, rising import costs, and a shock to households already under strain. For critics, this was evidence of surrender to Washington consensus orthodoxy Ethiopia trading sovereignty for IMF loans. For defenders, it was proof that the pain was unavoidable that someone had to stop the charade and expose the truth of Ethiopia’s distorted economy.

Nigat Post’s Take: Painful Truths, Necessary Reckonings

Let us be clear: Mamo did not create Ethiopia’s structural imbalances. He inherited them.

What he did was force the country to finally confront them. The overvalued birr was a subsidy for the connected few. The parallel market was not a side hustle it was the real economy. And the narrative of continental economic ranking was built on air. Floating the currency was not a betrayal. It was a reckoning. And like all reckonings, it has been painful. Prices rose. Public anger swelled. But the alternative was to keep living inside a carefully managed illusion, a Potemkin economy where numbers looked strong but reality was hollow. The true question now is not whether Mamo was right or wrong, but whether Ethiopia can turn this painful reset into an opportunity: to build exports, deepen capital markets, and broaden financial inclusion. Without those, devaluation is just pain without progress.

The Crossroads Ahead

With Mamo gone, the path forward is uncertain. His successor will face pressure to restore stability while not backtracking on reforms. Inflation must be contained. IMF relationships must be managed. And above all, Ethiopians must begin to feel that reform is more than suffering that it delivers tangible gains in jobs, credit, and opportunity.

History will judge Mamo not by whether he pleased the IMF, nor by whether he enraged critics, but by whether the reforms he initiated survive the political turbulence ahead. If they do, his legacy will be that of a governor who forced Ethiopia to face reality. If they don’t, his tenure may be remembered as just another chapter in the country’s long cycle of economic illusions.