2024 Ethiopian foreign exchange rate policy
On 29 July 2024, the National Bank of Ethiopia (NBE) announced relaxing restriction on currency value of the Ethiopian birr to secure loan of $10.7 billion from the International Monetary Fund (IMF) and World Bank. NBE announced the Ethiopian birr would devalued by 30% against the US dollar to promote market based foreign exchange system amidst forex crisis. Many Ethiopians concerned that the policy would rise the cost of living and aggravate inflation rate.[1]
Starting on 1 August, the government ordered closure of dozens of business entities that make surging price of basic commodities in Addis Ababa. According to Trade Bureau of Oromia, 19 businesses closed and 16 individuals were detained.[2]
Event
[edit]On 29 July 2024, the National Bank of Ethiopia (NBE) announced to ease restriction on currency value of the Ethiopian birr to secure loan of $10.7bn (£8.3bn) from the International Monetary Fund (IMF) and World Bank. This sharply declined by 30% against the US dollar. Upon hearing the news, Ethiopians concerned of the rise of cost of living amidst inflation. Ethiopia has been struggling foreign exchange crisis alongside persistent civil wars that lead to shortage of foreign crisis. Under such policy, the Ethiopian birr would set by the market.[3][4]
The policy came to effect after the government made negotiation with IMF and World Bank as IMF propelled Ethiopia to liberalize the forex in condition of receiving $10.7 billion in external financing.[5] Prime Minister Abiy Ahmed congratulated the government decision to float birr by claiming such measure would bring Ethiopia to prosperity.[6] On 1 August, the government ordered to shutdown dozens of businesses founded surging prices of basic commodities in Addis Ababa. Addis Ababa City Trade Bureau spokesperson Sewnet Ayele said "the businesses were caught making unreasonable price increases mostly on food items … The stocks were imported before the new exchange rate." Accordingly, 71 business entities have been affected. In Oromia Region, 19 businesses closed and 16 individuals were detained according to the head of the Trade Bureau of Oromia Meseret Assefa.[2]
References
[edit]- ^ "Ethiopia's currency dives by 30% as IMF-backed reforms to stabilize the economy take effect". AP News. 2024-07-30. Retrieved 2024-08-02.
- ^ a b "Ethiopian local authorities crack down on price hikes after currency float". www.cnbcafrica.com. 2024-08-01. Retrieved 2024-08-02.
- ^ "Ethiopia birr: Currency falls 30% amid IMF-friendly policy change". www.bbc.com. Retrieved 2024-08-02.
- ^ "Dollars Vanish From Ethiopia's Streets as Residents Hoard Forex". Bloomberg.com. 2024-07-31. Retrieved 2024-08-02.
- ^ Clynch, Harry (2024-07-31). "Will The Devaluation Of The Ethiopian Birr (ETB) Stoke Inflation?". Disruption Banking. Retrieved 2024-08-02.
- ^ Account (2024-08-01). "Devaluing the Birr: Inflicting pain on Ethiopians (Part I)". Borkena Ethiopian News. Retrieved 2024-08-02.