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Toronto – When there were rumors back in November 2023 that Abiy Ahmed’s Administration was introducing policy to further devalue Ethiopian Currency under pressure from the World Bank and IMF, the Ethiopian government denied that there was no plan to do so.
After several months of “discussion” with the above-mentioned multilateral institutions, – it is public knowledge that there is a view that emphasizes these organizations are dominated by the US and its allies, the Ethiopian government on Sunday announced a new major monetary policy to further devalue the Ethiopian currency.
The Ethiopian government argues that the policy is a fix to the existing economic problems – particular those related to foreign exchange.
Opposition to the new policy, it appears, was expected. For that reason, the introduction of the currency devaluation is announced as “Macro Economic Policy Implementation.”
The devaluation of the Ethiopian currency is effective as of July 28, 2024.
Financial and economic analysts seem to see an inevitable major price rise due the devaluation of the Ethiopian currency. Until yesterday, Ethiopian Banks were officially exchanging US dollars at a rate of 58 Ethiopian Birr ( it used to be under 26 Ethiopian when Abiy Ahmed took office in 2018). From now on the banks will be paying for hard currency at a rate of one that is in the Black Market.
Another major story that could be related to the development is that the Ethiopian government has announced that it has reached an agreement with lenders (World bank and IMF) and will be given a colossal amount of finance ( over $US 10 billion) to finance the “homegrown economic policy.” Certainly it will be hard to imagine for many institutions like the IMF and World Bank lending such a huge amount of money without dictating what they want the Ethiopian government to do with it. It appears that the currency devaluation was a precondition.
Mamo Mehretu, Governor of the National Bank of Ethiopia, explains ( in Amharic) the government position on the new policy. Take a listen and share your thoughts in the comment section.
Video : embedded from National Bank of Ethiopia YouTube channel
Cover photo : screenshot from the video
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