Ethiopia's Economy
Floating the Birr
How Ethiopia floated its currency, the birr, in July 2024 as part of an IMF deal, ending a big black-market gap, and the effects on prices and imports.
In July 2024, Ethiopia floated the birr.
Before
- The birr was held at an overvalued official rate.
- A parallel market rate was far weaker.
- Businesses faced long waits for dollars.
The float
The birr lost a large share of its value quickly after the float.
IMF deal
The float came with a $3.4 billion IMF programme and other support.
Effects
- Imports became more expensive, raising inflation.
- Exporters gained.
- The black-market gap narrowed.
Protection
The government expanded safety nets and fuel subsidies for poorer groups.
The import shop
An importer who waited months for dollars can now buy them at the market rate, though prices of imported goods rise.
Thinking floating a currency is painless
It raises import prices and inflation.
Key takeaways
- Ethiopia floated the birr in July 2024.
- The official rate was overvalued before.
- A $3.4 billion IMF programme followed.
- Imports became costlier.
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