Ethiopia’s birr may be poised for a rebound in the coming months, buoyed by record-breaking gold exports that have overtaken coffee shipments for the first time.
- Ethiopia’s birr may rebound after record-breaking gold exports surpassed coffee as the nation’s leading foreign-exchange earner.
- The birr’s turnaround could reverse its severe decline following the liberalization of the foreign-exchange market.
- Ethiopia’s economic reforms under the IMF program include curbing inflation and encouraging export-led growth, leading to promising outcomes.
- Gold exports surged to $3.5 billion in a year, supported by resumed mining activities and improved incentives for miners.
Ethiopia’s birr may be poised for a rebound in the coming months, buoyed by record-breaking gold exports that have overtaken coffee shipments for the first time, according to the country’s central bank governor.
The potential turnaround would mark a sharp shift from the prolonged decline that began after the government liberalised its foreign-exchange market, allowing the birr to float freely. Since the July 29 float, the currency has lost nearly two-thirds of its value, according to Bloomberg.
Ethiopia, one of Africa’s fastest-growing economies, has introduced a series of reforms under its International Monetary Fund (IMF) program, aimed at restoring market balance. The measures include curbing inflation, removing distortions caused by an artificially strong currency, and stimulating export-led growth.
The reforms are already yielding results. Gold exports from the Horn of Africa nation soared to $3.5 billion in the fiscal year through July 7, up from just $409 million a year earlier, Prime Minister Abiy Ahmed told lawmakers.
Coffee, traditionally Ethiopia’s top foreign-exchange earner, brought in $2.65 billion over the same period, nearly doubling from $1.4 billion the previous year.
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Exports strengthen debt outlook
The surge in gold output was driven by the resumption of operations at Midroc Gold Mine Plc, after the lifting of an environmental ban, and by higher payments to artisanal miners, which have helped reduce smuggling.
Manufacturing exports have also strengthened as factory capacity utilisation nearly doubled to 60%, helped by greater access to foreign currency.
The export boom has bolstered Ethiopia’s fiscal outlook and improved its negotiating position in debt-restructuring talks with holders of its $1 billion eurobond.
Creditors had previously criticised the government’s economic projections as overly conservative, but the latest data now point to a more robust recovery path.
