International Monetary Fund (IMF) Managing Director, Kristalina Georgieva, is expected to visit Ethiopia on February 8-9, 2025 — her first trip to Ethiopia since assuming the role of Managing Director in 2019.
Ahead of her visit, the IMF announced several measures pertaining to the Ethiopian economy, which is currently undergoing an IMF overseen and funded structural adjustment program.
Specifically, Ethiopia is expected to:
- Further ease foreign exchange restrictions.
- The National Bank of Ethiopia is to remove limits on foreign currency for travelers and reduce restrictions on family remittances.
- Ethiopian authorities are to eliminate a 2.5% commission on government foreign exchange transactions.
- A backlog of dividend payments are to be cleared over 18 months.
Additionally, the IMF has indicated that Ethiopia’s central bank must limit currency market intervention to controlling volatility through public auctions, with results to be published immediately.
Two major restrictions remain; however, businesses must still obtain tax clearance to send profits abroad and businesses must receive central bank approval before accessing foreign currency for imports.
Since adopting a free-floating exchange rate regime in July 2024 — as part of an ongoing IMF structural adjustment program — the Ethiopian Birr has lost over 120% of its value against the U.S. Dollar. While in the foreign exchange market, there continues to be a significant gap between the official (126 Birr/USD) and parallel (150 Birr/USD) rates.
Moreover, the combination of austerity measures, reduced government spending on pro-poor social programs, high level of inflation, declining real income, and skyrocketing prices are exacerbating poverty and inequality.
Ethiopian Policy Institute 