Ethiopia Floats Currency In Economic Reform.

Ethiopia has implemented the flotation of its birr currency in the open market as a measure to stabilise the currency and address the increasing demand for foreign currency needed for exports and economic initiatives.

Why is this important: The Ethiopian government has recently implemented significant measures aimed at enhancing its economy. These initiatives encompass efforts to restructure its debt, culminating in receiving a $1.5 billion loan from the World Bank. comprising a $1 billion grant and a $500 million low-interest credit line, marking the country's inaugural direct budgetary support facility. Furthermore, the government has introduced market-friendly reforms, allowing foreign investment banks to operate within its borders and establishing a securities exchange body to facilitate the listing of local companies. The new currency reform has resulted in a 30% depreciation against the U.S. dollar as it attempts to find its equilibrium on the open market

The bottom line: The broader economic forecast for Ethiopia projects a 6.7% GDP growth this year. The ongoing economic reforms harbour the potential to render the country eligible for $4.9 billion in debt repayment relief upon the successful completion of the debt restructuring process.

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