Before the government reaches to decision to devalue Ethiopian Birr, it has to think about calmly – EZEMA
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Toronto – Ethiopian Citizens For Social Justice Party (EZEMA) on Saturday released a statement warning that further devaluing the Ethiopian currency will not fix Ethiopia’s “economic fracture.”
EZEMA’s report came as the Ethiopian Delegation under the Minister For Finance, Ahmed Shide, is in the U.S. holding “discussions” with IMF and World Bank officials. Earlier this month, Senior International Monetary Fund (IMF) officials spent two weeks in Ethiopia holding talks with government officials including Prime Minister Abiy Ahmed – who introduced a range of radical neoliberal economic reform measures including property ownership for foreigners and opening up the export-import trade for expatriates.
In its statement titled “Devaluing Birr will not heal Ethiopia’s economic fracture!,” EZEMA listed the economic challenges Ethiopia is facing. Suspension of economic subsidy from monetary institutions due to the war in the Northern Part of Ethiopia and due to differences on economic reform measures, suspension of Ethiopia from AGOA, spending of Ethiopia’s little foreign currency earnings on debt and the severe impact that the war caused to the manufacturing sector have contributed to dwindling foreign exchange reserves, EZEMA said
Expressing best wishes for in the conversation that Ethiopian government authorities are having with Financial Institutions [IMF and World Bank], it said it is hopeful that the Financial Institutions will endeavor to support the Ethiopian economy to reverse possible regional and continental problems.
However, EZEMA noted that one of the conditions that Monetary Institutions demand as conditions is the devaluation of the purchasing power of Ethiopian Birr. “We believe that Devaluation of birr under pressure from International Monetary Institutions rather than its presumed benefits it will bring about negative impact on the economic and social security of citizens. In addition, it will not durably resolve our foreign currency exchange problems,” EZEMA said.
The statement underscored that its position is not based on theory but based on repeated experiences in the country that it is an unsuccessful policy option. In view of anticipated mounting pressure from international monetary institutions, EZEMA said the Ethiopian government must calmly think about it before reaching to devalue Ethiopian Birr.
In December 2023, there was a report that the Ethiopian government is moving in the direction of further devaluation of the Ethiopian Birr in an effort to address pre-conditions that lending monetary institutions are putting down the throats of Abiy Ahmed’s administration. The Governor of the National Bank of Ethiopia denied that it is introducing currency rate adjustments.
When Prime Minister Abiy Ahmed became Prime Minister in April 2018, Ethiopian birr exchange rate to the U.S. dollar was under 25 Ethiopian birr. Now, the official rate at the banks is about 56 Ethiopian Birr and it is selling for 115 Ethiopian birr in the black market.
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