Ethiopia's PM Abiy Ahmed Announces Market-Based Forex Regime, Plans to Float Currency

Jul 29, 2024, 03:42 AM

Ethiopia has announced the introduction of a market-based foreign exchange regime and a comprehensive macroeconomic reform policy. Prime Minister Abiy Ahmed stated that the country plans to float its currency, the birr, as part of these reforms. The measures include adopting a free-floating currency, shifting to an interest rate-based monetary policy framework, and implementing fiscal policy and government debt management reforms. The National Bank of Ethiopia has also announced the complete removal of rules governing banks' allocation of foreign exchange, granting special foreign exchange privileges to companies within special economic zones, and simplifying rules governing foreign currency accounts, particularly those held by foreign institutions. These reforms aim to correct foreign exchange distortions and strengthen the financial system.