ETHIOPIA: CURRENCY DEVALUATION LOOMS AS CRUCIAL STEP FOR SECURING IMF SUPPORT

   Wed, 24 April 2024

Ethiopia may need to consider a substantial currency devaluation soon to secure a rescue loan from the International Monetary Fund, whose mission departed the country last week without finalising a crucial agreement with the authorities. The failure to secure a deal may indicate the government's reluctance to commit to a currency devaluation, a move it fears could lead to high inflation and further fiscal challenges. Ethiopia, whose sovereign debt has officially been in default, faces concerns that it may need to resume debt repayments, thus increasing the risk of a second default. Meanwhile, lingering insecurity challenges are threatening to dampen the economic outlook.

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