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Concerned about inflation, Ethiopia’s PM supports currency float

Published

5 months ago

August 2, 2024

Prime Minister Abiy Ahmed of Ethiopia has defended this week’s move to a foreign exchange rate set by the market, claiming that it was not a devaluation of the birr currency but rather an attempt to reduce the difference between official and black market rates.

To get financial backing from the International Monetary Fund (IMF) and other creditors, and to restart the country’s long-delayed debt restructuring deal, the central bank on Monday enabled the birr to float freely.

On Friday, the largest lender in the nation, Commercial Bank of Ethiopia, reported that the birr had since dropped 31.5% versus the dollar, trading at 83.94 per greenback. Several economists and journalists have expressed fear that inflation may spike as a result.

“Saying Ethiopia has devalued its currency is wrong,” Abiy said in a televised briefing late on Thursday to explain the new policy.

“There were two markets. One is 100 and the other is 50. So when the gap between the two became wide, it brought many dangers. So what we said (the two) should be unified,” he said.

While removing foreign exchange trading limitations assisted Ethiopia in securing funds from the World Bank and the IMF, worries about the policy’s potential to drive up costs for low-income consumers have prompted at least two local governments to take action against businesses that raise prices.

According to the government and its creditors, liberalization will increase long-term growth and allow the private sector to contribute more to the economy.

Shortly after the currency was floating, Ethiopia received a $3.4 billion loan from the IMF. According to a senior official in the finance ministry, this would allow Ethiopia to finish restructuring its debt over the next three to six months.

Not long after, the World Bank authorized $1.5 billion in funding for Ethiopia’s first-ever budget support loan. According to Abiy, the restructuring of its $1 billion Eurobond would save $200 million thanks to the new financing.

Related Topics:Currency float Ethiopia Featured

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Moroccan annual inflation rises to 0.8% in November

Published

4 days ago

December 21, 2024

Ifeoluwa Dada

Morocco’s statistics office has confirmed that the country’s annual inflation rate, as determined by the consumer price index, increased from 0.7% in October to 0.8% in November.

Monthly, consumer prices decreased by 0.2% from October.

The primary driver of inflation, food costs, grew by 0.8% compared to the previous year, while non-food inflation climbed by 0.7%. Core inflation, which does not include more erratic items like food, increased 2.6% annually and 0.2% monthly.

According to the central bank, inflation is expected to average 1% this year, down from 6.1% last year.

Despite the Al-Haouz earthquake, a spike in inflation, and worldwide economic challenges, Morocco’s GDP grew by 3.4% in 2023.

A recovery in tourism, robust industrial exports, and rising private consumption—all bolstered by prudent macroeconomic policies—were the main drivers of growth.

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Nigeria’s $42bn foreign reserves enough for 9 months’ imports— Central Bank

Published

5 days ago

December 20, 2024

Ifeoluwa Dada

According to Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), the nation’s $42.01 billion in foreign reserves can cover imports of goods and services for almost nine months.

Cardoso promised Nigerians improved economic fortunes in 2025 while addressing the Senate Committee on Banking, Insurance, and Other Financial Institutions yesterday in Abuja at the presentation of the performance index report.

Cardoso stated: “External Reserves rose from $ 38.35 billion it was on September 30, 2024, to $ 42.01 billion as of December 12, 2024”.

He clarified that third-party receipts in Q3 2024 and revenues from taxes connected to crude oil were the main drivers of the rise in foreign reserves during the specified time.

“We saw remarkable improvements in our trade balance and maintained a current account surplus,” he added.

“Our external reserves level can finance over 9.09 months of import of goods and services or 13.91 months only, higher than the international benchmark of 3.0 months and a robust buffer against shocks”.

On cash shortage, the CBN boss reiterated the N150 million fine against any branch of banks caught illegally distributing new Naira notes to currency hawkers and unscrupulous elements and said the Nigerian economy will improve in 2025 through policies and measures.

He predicted a stronger economic future: “Despite our economy’s challenges, there are clear reasons for optimism.

“The gradual stabilization of the forex market, ongoing banking sector recapitalization, and positive growth trends in key sectors, especially the services sector, indicate a path toward recovery and stability.”