Addis Ababa: Ethiopia has taken transformational economic reform during the last five years, according to Fiscus International Public Finance consulting company.
According to Ethiopian News Agency, Fiscus International Public Finance consulting company director Andrew Lawson said the measures taken by the government have been transformational. He emphasized that open economies with free floating exchange rates tend to perform better in international markets, suggesting that Ethiopia needed to choose the right time to adopt such an approach.
Lawson noted that while there are always short-term difficulties, the reform will eventually open up opportunities. He explained that the reform will facilitate companies in importing necessary products to create value-added goods in Ethiopia, which is crucial for the country and its people.
He highlighted the importance of trust for trade to work effectively. ‘You need trust in the banking system, and you need trust that the exchange rate will be reasonably stable over time, which is what encourages investment,’ he mentioned. The move towards a free floating exchange rate is seen as crucial, with the process having been managed well.
Despite initial challenges, Lawson elaborated that the more competitive exchange rate has led to export growth, indicating encouraging trends. The director also discussed the benefits of the recent debt restructuring agreement with official creditors, stating that it will significantly improve the government’s reserve position and enhance Ethiopia’s credibility as a business partner.
Lawson remarked, ‘I think the debt restructuring agreement is very important, both in terms of reserves and the signal it gives about the creditworthiness of Ethiopia.’ Ethiopia recently reached an agreement in principle with its official creditors to restructure 8.4 billion USD of international debt under the G20 Common Framework. This agreement marks a significant milestone in normalizing the nation’s relations with international partners and delivering economic stability.