Macroeconomic reform key to realize sustainable growth: PSI

Addis Ababa, December 28, 2024 (FMC) — The macroeconomic reform being implemented in Ethiopia would significantly contribute to the sustainable economic growth of the country despite short-term challenges, Deputy Director General of Policy Studies Institute (PSI) Teferi Tiyaru said.

A consultative workshop on floatation of the Ethiopian Birr: economic implications and future pathways was held in Addis Ababa today with the aim to serve as a preparatory meeting to delineate the agenda for the international conference scheduled for January 23-25, 2025 in Addis Ababa.

Addressing the workshop, Teferi stated that the Ethiopian government has boldly decided to transition to a market determined exchange rate for the nation’s currency, ETB.

Floating the Ethiopian birr represents a significant economic policy shift, presenting both short-term challenges and long-term opportunities, he pointed out.

He added “While we may face volatility and inflationary pressures initially, the long-term benefits of market determined exchange rate are profound.”

With the right policy measures and careful management, the floatation of birr can contribute to sustainable economic growth and development in Ethiopia, the deputy director general said.

Ethiopian Economics Association (EEA) President Professor Tasew Wolde-Hanna on his part said that the macroeconomic reform has already shown a positive impact by narrowing the gap between the official and parallel market exchange rate.

He stressed the need to provide research-based recommendations from institutions such as the Ethiopian Economics Association to attain the long-term objective from macroeconomic reform.

Director of the Center for Governance and Intra-Africa Trade Studies (CGIATS) at the Johannesburg University Tadelle Kidane noted that reinforcing endeavors on infrastructure development and strong institutions is instrumental for effective implementation of macroeconomic reforms.

Today’s workshop is designed to address both opportunities and challenges associated with the floatation of the Ethiopian Birr, he further revealed.

“Together, we aim to explore practical pathways to ensure Ethiopia’s sustainable development and economic stability,” he said.

Ethiopia’s comprehensive macroeconomic reforms, being implemented since July 2024, are boosting the nation’s economic growth as the country has solidified its position as the largest economy in East Africa.

The targets of the comprehensive macroeconomic reforms are: achieving high and stable economic growth, maintaining single-digit inflation and building a globally competitive economic system, among others, it was learned.