Ethiopian Finance Minister responded to queries about birr devaluation yesterday. He presented country’s budget for the next fiscal year to the House of People’s Representatives on Tuesday.
Since the start of this year, speculations have been going around that the Ethiopian government will have to devalue birr. International Monetary Fund and World Bank have been urging the Ethiopian government, reportedly, to devalue currency. Ethiopia has been in talks with these lending institutions for a bailout package of around $3 billion.
There is a huge difference between birr’s official value ( 57 birr to 1 dollar ) and its rate in black market ( 120 birr to 1 dollar).
An MP, on Tuesday, warned against the devaluation as a policy response to the country’s foreign exchange woes, citing economists’ concerns about its immediate impact on low-income households. The Finance Minister acknowledged ongoing difficulties in managing the foreign currency regime and noted that high-level discussions are underway to determine appropriate measures.
“These are concerns we’re quite aware of,” he responded. “A sustainable foreign exchange regime has been part of our objectives.”
Interestingly, it was reported this week that World Food Program is concerned about likely birr devaluation. The WFP reportedly warned against currency devaluation. Millions of people in Ethiopia are dependent on food aid provided by WFP, USAID and other aid organizations. According to WFP, currency devaluation will lead to rise in inflation.
It seems that either Ethiopian government hopes it would be able to convince IMF and World Bank about the current exchange rate or it has found alternative sources of financing.
Ethiopian Minister of Finance, Ahmed Shide, this week visited Qatar and delivered a special message from the Ethiopian PM to the Emir of Qatar. Ethiopian government is in talks with UAE, Saudi Arabia, Qatar and other countries for financial support.
Read more..
Ethiopia: Government Considers Increase in Electricity Tariff
Further devaluation literally is a death sentence on tens of millions of ethiopian people. 57 birr for a dollar is too much, dollar euro pound et al are already over valued. To kill off the black market, the government has to discourage import businesses except on essentials like medicine. Factories that produce materials imported from abroad should be financed, tax exempted and other supports like land and loan should provided with a commitment not to change the business for at least ten years.
What you said is very true. The goverment have to suspect IMF why they are so conserned to devaluate our money. They will not be satisfied eveen if government devaluate our our money as much as they say and will contue to prussure for further devaluation.
13.49 billion Birr is neither estimated, presented nor legislated during Kermpt & Bega Pagume of 2016, when Summer & Winter 6 to 10 September, 2024 category one Amete Mehret and Anno Domini. This cause about an estimated values of188.89 billion Birr GDP is neither created & circulated nor recorded during Pagume of 2017 budget year.
Why is Ethiopia not working with the BRICS development bank for such loans? This is a great alternative to the IMF and the World Bank.
I agree with your suggestion. Its better to look for alternative source foreign currency. IMF is milking our country at the expense of worsening the economy of the middle income and the poor people. They are challenging our country in many ways (one of is devaluation) since all westerners are against the current administration in power.
What About Import Related Bank Charges from 13% to 30%? Will it not have an impact on Overall Economy? It is an indirect way of Depreciation….Why Do Not We Protest Against That Bwcause It Will.Increase Imflation and will.increase Waterflood Profit for tge Bank At What Cost?