A trade surplus in a country that imports most of what it consumes is the kind of result that deserves a second look before a celebration. Ethiopia has recorded one — a balance-of-payments surplus built on stronger exports and transfers — and the National Bank of Ethiopia has chosen to hold its policy settings steady rather than declare victory. The restraint is the more interesting decision. It says the surplus is real but not yet trusted.
The figures behind the turn are favourable. Exports and transfers came in strong enough to push the external account into surplus, and the NBE responded by keeping both its policy rate and its credit-growth cap in place. The committee also flagged a specific threat to the achievement: tension in the Middle East that could undercut both exports and remittances.
The Turn: A Surplus That Earned Itself
A balance-of-payments surplus means more foreign currency flowed into Ethiopia than flowed out — a meaningful reversal for an economy long defined by the opposite problem. The NBE attributes the result to two sources working together: strong exports, which bring in hard currency directly, and strong transfers, the remittances and inflows that diaspora and external partners send home.
That combination matters for a country managing a tight foreign-exchange position through currency reform. A surplus eases the chronic scarcity of foreign currency that has constrained importers, squeezed manufacturers dependent on imported inputs, and pressured the birr. It is the difference between an economy rationing access to dollars and one with a little more room to breathe. The improvement, set out in the NBE’s sixth Monetary Policy Committee statement, is the kind of external strengthening that supports the whole reform programme.
A surplus does not solve the foreign-currency problem; it loosens the grip long enough to plan.
The Steady Hand: Why Hold Instead of Ease
The revealing move is what the NBE did next, which was largely nothing. Faced with good news on the external account, the committee held the policy rate and maintained the credit-growth cap rather than loosening either. That is a deliberate choice, and it signals how the central bank reads its own success.
The logic is discipline over momentum. The surplus and the disinflation that accompanies it were produced in part by a tight stance, and easing too early would risk surrendering both. Holding the credit-growth cap keeps a lid on the rapid money expansion that could reignite inflation; holding the policy rate keeps the external position from being undermined by a fresh surge in demand for imports. The NBE is treating the surplus as a reason to stay the course, not to reward the economy with cheaper money. For operators hoping the good numbers would translate quickly into looser credit, the message is patience: stability is the policy, and it is being defended.
The central bank that holds steady through good news is the one signalling it intends to keep the good news.
The Exposed Flank: Exports and Remittances at Risk
The NBE’s own caveat is where the surplus shows its fragility. The committee flagged Middle East tension as a risk to exactly the two pillars the surplus rests on — exports and remittances. The exposure is structural. A large share of Ethiopia’s remittance inflows and trade links run through the Gulf and the broader region, which means instability there transmits directly into Ethiopia’s external accounts.
This is the localised face of a global risk. A disruption thousands of kilometres away can shrink the dollars a Gulf-based worker sends to a family in Addis Ababa and can interrupt the trade routes that carry Ethiopian goods to market. Because the surplus depends on both flows holding up, a regional shock could erase the achievement faster than domestic policy could offset it. The steady-hand stance is, in part, a hedge against precisely this: keeping reserves of policy room intact for a shock the NBE can see coming but cannot control.
An external surplus built on external flows is only ever as stable as the world it depends on.
The So-What: Use the Breathing Room Deliberately
For Ethiopian operators, the balance-of-payments turn is genuine progress, and the NBE’s decision to hold rather than ease is a signal worth respecting. Foreign currency should be modestly easier to access than during the worst of the squeeze, which matters most for importers and manufacturers who depend on it. But the central bank is not loosening credit, and it is openly watching a regional risk that could reverse the gains.
The practical reading is to treat the surplus as a window, not a new baseline. Businesses exposed to imported inputs should use the improved foreign-currency position to secure what they need now rather than betting it will widen. Those tied to exports or remittance-driven demand should stress-test their plans against a regional disruption. The economy has earned itself a little room. The operators who use it deliberately — rather than assuming it will last — are the ones who will still be standing if the world tightens again.
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