Ethiopia’s Inflation Reduction

NAIROBI/WASHINGTON (Reuters) – Ethiopia’s inflation is projected to drop to 10% in the upcoming financial year, as stated by central bank chief Mamo Mihretu on Thursday. This would be the lowest in a decade, attributed to the government’s reform program.

The country struck a four-year, $3.4 billion agreement with the International Monetary Fund last July and is undergoing extensive reforms, including floating its birr currency and addressing debt restructuring.

Inflation has been a significant issue for Ethiopia, running at approximately 30% for three consecutive years. However, Mamo noted that in March, inflation had already decreased to 13% during a briefing at the IMF and World Bank spring meetings in Washington. Ethiopia’s fiscal year spans from July to July.

Mamo anticipates that Ethiopian exports will double, remittances will rise by at least 25%, and highlighted that the nation has successfully built up its foreign currency reserves. He remarked, “One of the most serious issues that we faced before the reform was the dwindling and falling reserves that we had to worry about daily.”

“After the reform, our reserves level increased threefold. The reserves in the banking system increased twofold… there is a clear impact of this reform in terms of increasing and boosting the inflow into the economy.”