World Bank Urges Ethiopia to Devalue Birr to Boost Exports
Ethiopia ’s birr is overvalued and the country would benefit from a devaluation to boost export revenue and accelerate economic growth, the World Bank said. Reducing the currency’s value by 10 percent in real terms may lead to a 5 percent increase in stalled export earnings and a 2 percent increase in growth, Lars Moller, the bank’s chief economist in Ethiopia, told reporters today in the capital, Addis Ababa. Ethiopia last devalued its currency by 17 percent against the dollar in September 2010. Since then, the birr has appreciated in real terms by more than 50 percent, leading to a currency that’s overvalued by 31 percent, Moller said at a presentation of the lender’s third Ethiopia Economic Update . After growing at a rate of about 20 percent in previous years, annual Ethiopian goods exports have remained steady at about $3 billion for the past two years, primarily because of falling international commodity prices. Foreign earnings from goods may have grown about 8 perce