The National Bank of Ethiopia (NBE), the Ethiopian Capital Market Authority (ECMA), and the Ethiopian Securities Exchange (ESX) have officially launched the sale of treasury bills for the first time ever in the history of the nation.
Finance Minister Ahmed Shide announced during the launch on Friday, July 11 that the government is offering treasury bills to investors to help bridge a budget deficit of 188 billion birr, out of the total 1.9 trillion birr budget allocated for the 2018 fiscal year.
He stated that 173 billion birr of this deficit will be offset by raising capital through treasury bills.
According to the Minister, the domestic borrowing will be conducted in a way that avoids increasing inflation and maintains macroeconomic stability. He also noted that existing treasury bills are being transitioned to electronic transactions, and new issuances will follow via a digital format.
Tilahun Ismail (PhD), CEO of the Ethiopian Securities Exchange, announced that government treasury bills with a 182-day maturity, as well as shares of Wegagen and Geda banks, have started trading. He explained that Ethiopian individuals and institutions can now buy and sell bills and shares through investment banks.
He added that government debt securities can be purchased from a minimum amount of 4,700 birr upward, while bank shares are available from a floor price of 1,000 birr.
Technological infrastructure has been developed to support these transactions. Tilahun also mentioned that all banks—except for commercial bank of Ethiopia and development bank—and one state-owned insurance company are preparing to list their shares.
The Ethiopian Securities Exchange aims to list 50 companies within the next three years and 90 companies over the next decade. Government development enterprises may also be introduced to the market in the future.
Mamo Mehiretu, Governor of the National Bank of Ethiopia, emphasized that the organization of the capital market will play a key role in enhancing the effectiveness of monetary policy, reducing inflation, and supporting overall macroeconomic stability.
He underscored the importance of supporting the growth and strengthening of the securities market, highlighting the necessity of treasury bill sales to address the budget deficit.
