November 18, 2017 – The government of Ethiopia announced plans to procure another batch of wheat amounting to 400,000 tons, reports Ethiopian weekly English newspaper, the reporter. The purchase came at a point when the country is experiencing double-digit inflation. According to the Central Statistics Agency, the rate of inflation by the end of October 2017 stood at 12.2 percent, the highest since October 2015.The high inflation rate, attributed to the recent 15 percent devaluation of the birr, is expected to increase in the coming months.
Economic commentators predict that given the current devaluation, inflation might soar as high as 30 percent.
Unlike the earlier purchase which was intended to mitigate the impact of the ongoing drought, this time around the purchase is being made to stabilize the market.
It is to be recalled that a week ago two international trading companies agreed to supply 400,000 metric tons of wheat. This purchase is expected to feed close to 5.4 million people out of the 8.5 million people who are affected by drought. The remaining 3.1 million would benefit from relief supplies by the World Food Program and other donors.
However, import from the latest bid floated last week by the Public Procurement and Property Disposal Service will mainly be used to stabilize the local market.
The latest purchase has come five months after a similar procurement of 400,000 tons of wheat for the same purpose of market stabilization. At the time, the government spent around 2.1 billion birr to procure the wheat.
The latest purchase of wheat will be the second biggest wheat purchase made in as many years. It is to be recalled that in 2015-16, Ethiopia made its biggest purchase of wheat in recent years by procuring 17 million quintals of wheat at a total cost of 8.8 billion birr.
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