Ethiopia Devalues Currency by 15 Percent to Boost Exports

Addis Ababa earned $2.9 billion (2.20 billion pounds)in the 2017-2018 fiscal year, versus a target of $4 billion.

On Tuesday, the central bank also announced that it has raised the main interest rate to 7 percent from 5 percent to stimulate savings as well as to counter inflation.

“The rate was pushed to mitigate the inflationary pressure that could arise from the devaluation,” Yohannes said.

Ethiopia’s inflation <ETCPIY=ECI> rose slightly to 10.8 percent year-on-year in September from 10.4 percent a month earlier, according to figures released by the statistics office on Friday.

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Ethiopia’s economy is one of the fastest growing in Africa, with the IMF expecting a growth rate of 9 percent for the 2016/17 fiscal year.

The expansion, however, has mainly been fuelled by huge public expenditure. The government has invested heavily in dams for hydroelectric power, new highways and an electrified railway linking the landlocked nation to a port in neighbouring Djibouti.

The IMF has said Ethiopia needs to attract more private sector investment to maintain growth. But Addis Ababa has in the past tended to brush off such advice and said it would keep charge of key sectors.

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(Reporting by Aaron Maasho; Editing by John Stonestreet and Andrew Heavens)

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