Inflation Woes Grip Addis Ababa as Ethiopian Birr Plummets Under New Exchange Rate Policy

Ethiopia is grappling with severe inflation as the Ethiopian birr has lost 60% of its value against the dollar, following the government’s recent shift to a flexible exchange rate policy. The effects are acutely felt in Addis Ababa, where businesses are struggling to keep up with the rapidly changing market landscape.

In the capital’s suburbs, like Bole, restaurants like Samra Hotel have had to erase prices from their menus, updating them as frequently as by the hour. Rahel Teshome, an employee at the hotel, explained that this volatility in pricing reflects the broader economic instability caused by the policy change.

Supermarkets across the city are reportedly hoarding goods in warehouses, selling only small quantities in stores to avoid penalties from authorities. Consumers seeking bulk purchases are forced to pay inflated prices directly from these warehouses. In response, the Addis Ababa City Trade Bureau has vowed to crack down on hoarders, with over 3,000 stores already shut down for hoarding practices.

At Merkato, the city’s largest open-air market, police have been deployed to prevent price hikes, and recent raids on warehouses resulted in the confiscation of 800,000 liters of edible oil, which was redistributed at old prices through local cooperatives.

The government’s decision to float the birr marks a significant shift from decades of fixed currency rates, which had fueled a thriving black market. The new policy, backed by a $3.4 billion credit facility from the International Monetary Fund (IMF), is seen as a historic reform. However, the immediate impact on everyday life has been harsh, particularly for those with fixed incomes, as prices for essential goods skyrocket.

The government has taken steps to mitigate the fallout, such as importing 14 million liters of edible oil, but these efforts have been insufficient against the backdrop of rising costs for other necessities. Public policy specialist Getachew T. Alemu warns that without careful policy measures, the situation could worsen, especially for those with stagnant wages.

The economic strain is further illustrated by the government’s recent decision to increase the price of passports from 2,000 to 5,000 birr, leaving citizens like Almaz Teferi, who are seeking employment abroad, struggling to keep up with the escalating costs.

As the country navigates these turbulent times, the impact of the birr’s depreciation is expected to deepen, challenging both the government and the citizens of Ethiopia.

Likes:
0 0
Views:
52
Article Categories:
Africa

Leave a Reply

Your email address will not be published. Required fields are marked *