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By Aaron Maasho
http://af.reuters.com

BirrADDIS ABABA (Reuters) – Ethiopia should consider devaluing its currency to boost exports as they are mostly unprocessed products and need to stay competitive on price, a World Bank economist said on Tuesday.

Ethiopia, whose main exports are coffee, horticultural products, oilseeds and livestock, has operated a carefully managed floating exchange rate regime since 1992.

The last big devaluation was in 2010 when the birr lost 16.7 percent of its value to the dollar. The central bank quoted the birr at 19.6511/19.8476 to the U.S. currency on Tuesday.

“By one measure of real exchange rate, Ethiopia’s currency is 31 percent overvalued,” the World Bank’s lead economist in Ethiopia, Lars Christian Moller, said in Addis Ababa.

At an event to launch an economic report on the Horn of Africa nation, he said devaluing the currency by 10 percent could increase export growth by 5 percentage points a year.

“Ethiopia’s exports are relatively unsophisticated, unprocessed and tend to compete in price, that means that we need to look more into what are the export prices, and how can we manage them,” he said.

“This is where a competitive real exchange rate comes in. We argue that it could help support export promotion,” he added.

The Horn of Africa country’s exports rose to $2.6 billion in the first 10 months of 2013/2014, an increase of almost $5 million over revenue earned through all of 2012/2013.

But earnings from coffee, the country’s main commodity export, tumbled to about $489 million during the period, less than half of the government’s target.

Ethiopia has been a star economic performer in Africa, reporting double-digit growth in several recent years. Growth has edged down but the International Monetary Fund still expects a robust 8 to 8.5 percent for fiscal years 2013/14 and 2014/15.

Both the World Bank and IMF have said the government needs to loosen the reins on the economy, which is still heavily controlled by the state, to avoid squeezing out the private business and hurting growth prospects in future.

 

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4 comments

  1. The neoliberalist can not sleep without controlling Ethiopia. They now stopped the demand for privatizing Ethiopian bank, telecom,… they now realized the privatize rhetoric fell on deaf ear. Now they came up with a new strategy that is to devalue the Ethiopia money so that Ethiopia can develop? hahah hahas, I am laughing. They are the most, wicked and cynical human being. How can Ethiopia develop by nulling or devaluing its money? World Bank came with this new strategy because the demand for Ethiopia to sell its Banking, Telecome was rejected. No country ever developed by devaluing its money. Country do all they can to keep the value of the money high. WB new theory is new trick because they can not sleep if they do not control the bank, telecom ,… in Ethiopia. I remember WB urging Ethiopia to stop the GERD for the sake of development. They asked the government many times to cut spending on the public sector which a neoliberal ideology how to weaken country’s and paralyze them. Why is actually WB involved in Ethiopian affaires? Ethiopia has become a toilet of western interference. NGOS, financial institutions and Journalists are meddling in the country. It is hard to say Ethiopia has a government of its own. You can see the number of journalists working hard to destabilize Ethiopia and you can see all the NGOS. Ethiopia is now a toilet of everyone and EPRDF has no power in Ethiopia. EPRDF is there to sell Ethiopia and collect frfari of western NGOS,…. I do not understand why WB is sleepless to dictate how Ethiopia must run its business. This is embarrassing honestly. Is there a country that is not destroyed by WB? Anyway, if EPRDF does what they are saying, then EPRDF will lose everything and Ethiopians will suffer and the predators will come in to prey on the Ethiopian people. EPRDF must instead increase the value of the money to be as powerful as dollar or Euro, but not devalue it. This will be suicidal. The bank, telecom,… belongs to Ethiopians people and they are national security. Bank, Telecom, … controlled by neoliberals means there will not be Ethiopia because telecom and bank are national security, sovereignity issues that can not be given away to predators like WB, IMF. No country has sold its bank, telecom, … to any foreign citizen. I am saying no country has ever done that except those which were colonies. WB call for devaluing money has nothing to do with Ethiopains development but a cynical and evil scheme to weaken the government and to undermine the Ethiopian people and to prey on them. Before you catch your prey, you have to control they prey in many ways. Then you take control. This is what WB. This time they did not mention about the bank, telecom,… privatization because they changed their tactic now after realizing that is not going to work. If EPRD was to listen to them, Ethiopia might have been gone along ago. GERD would have been stopped. Immediately after the death of Meles Zenawi they demanded Ethiopia to terminate building the GERD. WB, IMF, … evil, racist, colonialist. By the way, WB, IMF has refused to reform and everything they business is based on colonial time policy which colonial plus neocolonial. What we need from them is only money. We do not need their advices what to do. Why would bank denied Ethiopia loan all these decades to build dams? Anyway, I urge the Ethiopia government to do the opposite what the WB is urging to do. The government increase the value of the Ethiopian birr and empower Ethiopians and make their life easier by increasing the purchasing power of the money.

      1. dedeb; why you do not teach me if you have any knowledge of economic,TPLF is your nightmare and in your dream you see everyone in the image of TPLF? Bastard

  2. as for myself devaluation of ethiopian currency has nothing to do with neolibralism ideology.we are not ready to import neolibralism b/c we are living with a great unwashed leaders &people.that is it.for 3000 years yet unchanged.amazing !!!

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