ETHIOPIA · MARKETS
Ethiopia sold Birr 22.5485 billion (about US$140 million) of Treasury bills on Wednesday 28 October 2026 at yields far below the central bank’s 16% benchmark rate, called the policy rate. A Treasury bill is a short-term loan to the government sold at auction, and the yield is the interest the buyer earns.
The 364-day bills paid 6.016%, about 10 percentage points under the 16% policy rate of the National Bank of Ethiopia (NBE), the central bank. Savers, banks and the government all feel that gap.
Key Facts
- Auction Birr 22.5485 billion (about US$140 million) of Treasury bills sold on 28 October, all accepted.
- Demand Bids reached Birr 69.5185 billion (about US$432 million), about 3.1 times the amount sold.
- Yields Bills paid 1.305% (28-day), 2.016% (91-day), 3.676% (182-day) and 6.016% (364-day).
- Policy rate The central bank’s benchmark rate is 16%, raised from 15% in July.
- Unknown The yields of the next auction are not yet known.
What the Auction Showed
The Ministry of Finance, which runs the government’s borrowing, offered Birr 22.5485 billion (about US$140 million at 160.9 birr per US$, the 9 November 2026 rate) and accepted all of it. Bids reached Birr 69.5185 billion (about US$432 million), about 3.1 times the amount sold.
Cut-off yields, the rates at which each maturity closed, were 1.305% for 28-day bills, 2.016% for 91-day, 3.676% for 182-day and 6.016% for 364-day bills. The weighted average yield for all bills was 4.708%.
The longest bills took the most money, with Birr 12.31 billion (about US$76.5 million) in 364-day paper. The 28-day bills took just Birr 513 million (about US$3.2 million).
Why Yields Sit Far Below the Policy Rate
The policy rate, the central bank’s benchmark for borrowing costs, is 16%. The 364-day yield of 6.016% sits about 10 percentage points below it, and the 28-day yield of 1.305% about 15 points below.
In July 2026 the NBE’s Monetary Policy Committee, its rate-setting panel, raised the policy rate by one percentage point, to 16% from 15%. Bill yields have fallen a long way since May: the 91-day yield averaged 11.0% in May, against 2.016% on 28 October.
The NBE said the 7-day interbank rate, the price banks charge each other for week-long loans, fell to 14.6% in May from about 18.0% in March, reflecting excess liquidity, meaning spare cash, concentrated in a few banks. It added that reserve money growth, the expansion of central bank cash, was driven mainly by net foreign assets, meaning its holdings of gold and foreign currency, from gold operations.
Our reading, not an NBE statement: when banks hold more cash than they can lend, they bid for bills and push yields down. Bids of 3.1 times the amount sold, known as oversubscription, fit that picture.
What It Means for You
Savers who hold bills earn little: 28-day paper pays 1.305% and 91-day paper 2.016%, far under the 16% policy rate. Banks that park spare cash in bills also earn much less than that benchmark.
The government borrows cheaply, at an average yield of 4.708% across all bills, weighted by amount. Anyone converting bill returns into dollars should note the exchange rate, which was 160.9 birr per US$ on 9 November 2026.
Anyone tracking the country can follow our Ethiopia coverage. Our report on the new gold refinery adds the gold side of the story.
What Is Not Known
It is not known whether the 16% policy rate will pass through to bill yields. Further auctions are due, but their results are not yet known, so it is unclear whether yields will stay this low.
The NBE’s policy statement gives no gold purchase volumes, so the amount of birr paid out for gold is unclear. How far gold-fed cash explains the low yields is therefore our reading, not an NBE finding.
Our earlier report on the first gold delivery from the northern Amhara region to the central bank shows one source of that flow. It is not a national total.
Frequently Asked Questions
What is a Treasury bill?
A Treasury bill is a short-term loan to the government, sold at auction. Ethiopia’s bills on 28 October ran for 28, 91, 182 or 364 days.
How far below the policy rate are Ethiopia’s bill yields?
The 364-day yield of 6.016% is about 10 percentage points below the 16% policy rate. The 28-day yield of 1.305% is about 15 points below.
Why are the yields so low?
The National Bank of Ethiopia said excess liquidity, or spare cash, was concentrated in a few banks. Our reading is that banks with spare cash bid for bills and push yields down.
Sources: National Bank of Ethiopia treasury-bill auction results, 28 October 2026 (nbe.gov.et/treasury-bills); National Bank of Ethiopia, Monetary Policy Committee meeting No. 7 press release, 13 July 2026 (nbe.gov.et/mpc7); National Bank of Ethiopia, policy rate page (nbe.gov.et/monetary-policies). Exchange rate: 160.9 birr per US$, 9 November 2026.
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