JOHANNESBURG, Jan 19 (Reuters) - Ethiopia's deputy finance minister said on Thursday that rumours the birr currency would be devalued were "completel
JOHANNESBURG, Jan 19 (Reuters) – Ethiopia’s deputy
finance minister said on Thursday that rumours the birr currency
would be devalued were “completely unfounded”, as the east
African country seeks an International Monetary Fund (IMF) loan
after an African Union-backed ceasefire.
The birr currently trades at 53.42 to the U.S.
dollar, according to Refinitiv Eikon data, but it is worth 96-97
on the black market according to a Reuters reporter and the
country has long experienced foreign exchange shortages.
“There is widespread rumour that devaluation is in the
making. This is just a rumour. Completely unfounded,” state
finance minister Eyob Tekalign said on Twitter.
“A sensible macro reform is always our agenda but there
should not be any concern about mere devaluation.”
Ethiopia currently operates a managed exchange rate for the
birr, allowing it to depreciate gradually against the dollar. In
2020, the IMF recommended moving to a market-clearing exchange
rate regime, to deal with an overvalued currency and FX
shortages.
Africa’s second-most populous country requested a debt
restructuring under the Group of 20’s Common Framework process
in early 2021, but progress was held up by a two-year civil war
in the Tigray region.
Ethiopia’s government and the Tigray People’s Liberation
Front (TPLF), a guerilla force-turned-political party, agreed on
Nov. 2 to stop fighting following talks.
The IMF requires debt relief commitments from a country’s
bilateral creditors before it agrees to a loan programme.
Adopting a more flexible exchange rate is also often a
stipulation of the IMF, with Egypt’s pound weakening after it
moved to a more market-determined forex regime under the terms
of a fund programme.
“We’ve made it very clear, we want to reform our forex
regime,” Eyob told Reuters in an October interview. “So the
exchange rate unification remains one important policy goal, but
we are just doing it gradually.”
(Reporting by Rachel Savage in Johannesburg, Additional
reporting by Duncan Miriri in Nairobi and Dawit Endeshaw in
Addis Ababa; editing by Marc Jones and FRank Jack Daniel)
news.google.com