Ethiopia: Construction activities in Addis Ababa and surrounding Sheger city have been seriously disrupted after the ongoing change in FX rates. Reportedly, cement and steel traders and distributors have raised prices significantly following the government’s implementation of a market-based foreign exchange policy.
The prices of cement and steel have been increased before the announcement of any official price change by the government. In some areas, construction material has disappeared from the market. The traders either do not want to sell the material at old prices or they are waiting for price increase.
A quintal of cement, which was sold for 1 thousand 550 birr last week, now costs 2 thousand 200 birr.
Prime Minister Abiy announced in a message posted on his social networking page this week that the government has given responsibility to the law enforcement agencies to take action against “greedy businessmen” who want to use economic reforms illegally.
Abiy stressed that the macro economic policy changes that the government has taken recently should be looked at holistically and not in isolation. At present, the government’s focus is to increase productivity, foreign trade and income, he said. Abiy gave an explanation to various stakeholders regarding the newly implemented market-oriented foreign exchange policy and other economic reforms.
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Because of MARKET BASED FOREIGN POLICY, if sold at old rates, then Replacement cost cannot be measurement and Future Cash Flow Might Become Negative.