Ethiopia Introduces Currency Devaluation Embedding it in …
Ethiopian Currency could lose up to 100 percent of its value due to the planned devaluation
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Toronto – After a long time of back and forth backdoor negotiation and announced discussions with World Bank and IMF authorities from Morocco to the United States and Ethiopia, Abiy Ahmed’s administration is now making it official that he is kneeling to the imposition from the World Financial Institutions to significantly devalue Ethiopia’s currency. At one point, the World Bank officials spent over a week in Ethiopia “holding talks with Ethiopian officials.”
There are reports that the government is expecting over US $10 billion from the IMF and World Bank in the form of loan whose precondition is the further devaluation of Ethiopian Birr.
His government on Sunday announced the decision about it. It appears that due to the blowing effect it could have on the already chronic legitimacy crisis his government is experiencing, the changes are introduced embedded within the framework of disclosure about “Macro-Economic Policy Implementation.”
The government still argues that the introduced policy change – including the devaluation – is within the “framework of homegrown.”
The currency devaluation is presented as “Market based Foreign Exchange Rate Regime.” The government argues or it seems to argue that the devaluation will address negative trade imbalance and remove constraints to the private sector growth in the country.
The statement released from the office of the Prime Minister reads “…market-based foreign exchange rate regime is critical to relieving FX-shortages, removing constraints to private sector investment and growth, aligning the prices of the imported and exported goods and services with market realities. This approach also addresses imbalances in the balance of payments and offers numerous additional benefits…”
When Abiy Ahmed was named as Prime Minister in 2018 in a political arrangement within the then ruling coalition, Ethiopian People’s Revolutionary Democratic Front (EPRDF) – now defunct, one U.S. dollar was exchanged to 25 Ethiopian Birr. Currently the official rate of exchange in the banks is over 57 Ethiopian Birr.
However, it has been several months now since the government started the exchange rate at a rate of the black market when Ethiopians living abroad send money directly to a bank account in Ethiopia. For example, $US 1 was fetching over 115 Ethiopian Birr and $1 Cad was fetching about 86 Ethiopian Birr.
With the implementation of the “Macro Economic Policy” US$1 is expected to fetch over 200 Ethiopian Birr, apparently as the World Monetary Institutions dictated it following a series of back and forth meetings with Ethiopian officials.
The Ethiopian government is yet to disclose as to what the new exact exchange rate is .
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