ADDIS ABABA, Nov. 9 (Xinhua) — A 15-percent devaluation of Ethiopia’s currency Birr in October is already showing signs of spurring an economic revival, Ethiopian Prime Minister Hailemariam Desalegn said on Thursday.
The Birr depreciated from 23.5 birr to one U.S. dollar at the start of October to 27 Birr to one dollar currently.
Speaking to media, the PM said the Birr devaluation was necessary to cover the cost Ethiopia had been incurring while importing capital goods and also to boost Ethiopia’s lagging export revenues.
Ethiopia’s exports stood at 2.9 billion dollars during the 2016/17 Ethiopian Fiscal Year, which ended July 8, far lower than a target of 4 billion dollars.
“The Birr devaluation is encouraging local savings as well as led to a rise in Foreign Direct Investment and export revenues,” the PM said, noting that an earlier 17 percent devaluation of the Birr in August 2010 has led Ethiopia’s GDP to increase from 20 billion dollars in 2010 to around 80 billion dollars currently.
Desalegn nevertheless acknowledged the Birr devaluation has led to increase in prices of basic consumer goods and vowed to take administrative action against traders who make unfair price adjustment on consumer goods.