NBE to Phase out Premium Payments for Gold Suppliers End 2026

The National Bank of Ethiopia (NBE) is slated to end premium payments for gold suppliers starting at the end of the year, according to an IMF document published this week.

“A plan to phase out the premium paid to miners above international prices will be adopted by end-September 2026, in conjunction with the NBE recapitalization plan. A longer-term exit strategy from direct participation in the gold market will be developed by end-December 2026, considering implications for reserve accumulation objectives,” reads the IMF’s fifth review of Ethiopia’s extended credit facility program.

In the meantime, the central bank is working to grow its ore purity verification capacity and improve internal procedures.

The IMF document claims illicit gold trade is also contributing to the parallel market, posing an obstacle to the program’s goal of unifying the official and parallel forex market rates. 

“To the extent that gold export earnings are the marginal source of FX, the premium paid by the NBE for gold purchases (around 5–15 percent above international prices) may contribute to determining the parallel market exchange rate,” reads the IMF document.

Other factors contributing to persistent parallel market spreads include restrictions on access to forex for current account transactions, high bank transaction costs, the central bank’s forex commission (which dropped one percentage point to 1.5 percent this week), and “possible informal payments or hidden costs through cross-selling of other products.”

“Potential collusion among banks may reflect a preference for low-volume, high-margin transactions, that give them market power through FX allocation decisions. The absence of hedging instruments in the formal market may drive participants to the parallel market to lock in exchange rates,” reads the document, noting that high customs duties and taxes on imports create incentives for smuggling and sourcing forex in the parallel market.

IMF staff foresee Ethiopia’s strong export performance continuing in 2026/27, predicting that coffee export revenues will approach USD three billion despite a 35 percent decline in international coffee prices since November 2025.

“Overall, the goods trade deficit is expected to narrow slightly compared with the fourth review and end the year at USD 12.6 billion with high gold prices supporting outcomes over the medium term,” reads the document.

Still, the IMF warns that high fuel prices stemming from the US-Iran conflict and the prospect of falling international gold and coffee prices could “pressure reserves and complicate the objective of reaching 3.5 months of import coverage by the end of the program.”

Reserves are currently estimated to cover 2.1 months of imports. The IMF program is scheduled to come to a close in 2028.