|
The value of the Birr against the dollar has become
further devalued by five per cent, after Ethiopia's
macro-economic team chaired by Prime Minister Meles
Zenawi made the decision on Friday, January 30,
2009.
Banks in the country were told by the central bank
on Saturday morning to exchange a dollar for 13.57
Br.
Central bank Governor, Teklewold Atnafu, is a member
of the macro economic team; others include Girma
Birru, minister of Trade and Industry (MoTI); Sufian
Ahmed, minister of Finance and Economic Development
(MoFED); and Neway-Chab Gebreab, senior
macro-economic advisor to the Prime Minister.
This is the fourth macro-economic policy
intervention in devaluating the Birr against the
dollar since October 2008. The value of the Birr has
depreciated by 30pc during this period; the largest
jump was back in July 2009, when the team decided to
devalue the Birr by 15pc.
The latest rate of devaluation is similar to the
first policy move taken back in October 2008. A
total of 10pc depreciation was observed in a period
of one week.
Policymakers believe that the series of devaluations
of the Birr has helped the export sector to remain
competitive. But, there were policy advisors within
and outside of the government who have been pushing
for further but "modest" devaluations, for they
believed the Birr remained "overvalued" to help the
nation meet its export revenues target for the
fiscal year.
"Ours is modest compared to our competitors," a
macro-economic policy advisor told Fortune.
He compares the series of devaluation in Ethiopia to
Kenya, a neighbouring but competing nation in the
export market which devalued its currency by 45pc
over the past one year.
The federal government was hoping to earn close to
three billion dollars from export in 2009/10. This
target has proven to be illusive. The performance
for the first two quarters of the fiscal year has
been registered at 709.6 million dollars, against
what was planned which was 1.19 billion dollars.
Only the export of Khat has met the plan,
surpassing the 90 million dollars target for the
half year by seven million dollars.
This has put pressure on the balance of payments,
according to macro-economic experts. Thus last
week's policy-induced devaluation is an attempt to
ensure the stability of balance of payments.
"I believe they have gone enough in their
macro-economic policy move," said a macro-economic
analyst. "I don't think there will be anymore
policy-induced measure for some time to come."
This is a view shared by the market.
It is unlikely that the government will make any
further drastic and unexpected devaluation, a senior
private bank executive told Fortune. But he
sees that the government leaves it to the
competitive bidding market among the banks.
"It seems they are satisfied with the results of the
measures they have taken so far," the senior bank
executive told Fortune. |
