Ethiopia has taken a significant step to ensure the steady supply of essential commodities by importing 14 million liters of cooking oil. This initiative comes in the wake of the National Bank of Ethiopia's strategic decision to float the national currency, the birr, last week, marking a positive shift towards securing robust international support.
The move to adopt a market-determined foreign exchange rate has opened new doors for Ethiopia, culminating in a landmark $3.4 billion lending agreement with the International Monetary Fund (IMF) and additional funding from the World Bank and other global creditors. This financial boost is set to enhance Ethiopia's trade landscape and accelerate its debt restructuring efforts.
As the birr adjusted to its new market-driven rate, experiencing a 40% devaluation against the dollar, the nation's largest lender, Commercial Bank of Ethiopia, reported an exchange rate of 95.69 birr per dollar. Some private banks noted rates exceeding 100 birr per dollar. Despite the initial increase in cooking oil prices by around 25% in Addis Ababa, this economic reform is anticipated to foster long-term trade stability and growth.
Trade and Regional Integration Minister Kassahun Gofe highlighted the government's proactive stance in maintaining fair market practices. He assured that businesses inflating prices of basic goods would face stringent measures, including temporary closures and license revocations. Already, the ministry has shut down over 2,000 stores for unjustified price hikes and hoarding since the new exchange rate policy was implemented.
These decisive actions underscore Ethiopia's commitment to creating a stable and thriving trade environment. By embracing currency reforms and securing international financial support, Ethiopia is poised for enhanced trade opportunities and sustainable economic growth.
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