ADDIS ABABA, Ethiopia – August 29, 2025 – Ethiopia is set to lift the long-standing cap on bank lending starting next month, a move that could inject more than 1.3 trillion birr into the economy, according to officials at the Ministry of Finance.
The policy shift, scheduled to take effect in September, will allow banks to expand credit supply in line with market demand, easing a restriction that has constrained lending for several years. The new lending volume represents a 500 billion birr increase compared to last year, underscoring the government’s push to expand financial access for businesses and households.
Finance Minister Eyob Tekalign (PhD) confirmed the plan, noting that safeguards have been put in place to prevent runaway inflation. “The release of such a large volume of credit must be accompanied by prudent monetary oversight to ensure that it does not overheat the market,” he said in a briefing.
Inflation Risks and Precautions
Ethiopia has been battling double-digit inflation for years, with food prices and currency depreciation fueling household pressures. Analysts warn that while additional liquidity could support investment and private-sector growth, it also risks stoking demand-side inflation unless carefully managed.
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