Meles Zenawi promising no devaluation for the next 5 years

meles zenawi

Reuters

  • Sees no major birr devaluation, will regulate rate
  • Govt to seek ways of easing inflationary pressures

ADDIS ABABA, Feb 3 (Reuters) – Ethiopian Prime Minister Meles Zenawi ruled out the possibility of another major devaluation of the birr on Thursday amid concerns the present rate is fuelling inflation in the Horn of Africa nation.

“There will not be any major changes to the rate in the coming five years,” Meles told legislators during a question and answer session in the capital Addis Ababa.

meles zenawi
"There will not be any major changes to the rate in the coming five years,"

“What we will do instead is monitor and regulate the rate on the basis of conditions on the ground, with an eye on its effect on trade with our major partners,” Meles said.

Ethiopia’s annual inflation jumped to 14.5 percent last month from 10.2 percent in November after a steep rise in food and non-food prices caused in part by two currency devaluations in less than 12 months.

Ethiopia has operated a managed floating exchange rate regime on the birr ETB= since 1992.

Meles said his administration would seek further ways to ease inflationary pressure, a month after a price cap was imposed on more than a dozen commodities.
Government officials accuse traders of artificially inflating food prices on the back of global price increases and a September devaluation of the birr.

“Our main aim in the long run is to increase production to satisfy basic needs. We need to balance supply and demand,” Meles told lawmakers.

Meles said that if traders failed to cut prices on essential goods in accordance with the price caps then government outlets would start selling items at fixed prices.

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