56% of Economists Are Not Convinced the Birr Float Will Last, EEA Report

Betegbar Yaregal

#EBR_News Oct 3, 2026

More than half of Ethiopian economists doubt that the country’s market-based exchange rate regime will survive the next two to three years. According to a new report by the Ethiopian Economics Association (EEA), 56.4% of the 266 experts surveyed in June 2026 described the outlook for the birr float as either uncertain, with a meaningful risk of partial reversal (38.7%), or unlikely to hold, with significant controls expected to return (17.7%). The report was authored by EEA senior researcher Naser Yenus Nuru (PhD).

Confidence in the regime is thin even among supporters. Only 15% of respondents consider the float highly likely to be sustained without major reversal, while another 26.3% expect it to survive alongside occasional administrative interventions at the margin. Ethiopia moved to a market-determined exchange rate in July 2024.

 The report warns that businesses and traders who price in the risk of a policy reversal or fresh depreciation can keep inflation elevated, even if the policy itself stays in place.

The birr’s own standing adds to the unease. According to the report, 70.7% of experts believe confidence in the currency as a store of value has worsened since the reforms, and only 3% say it has improved significantly. 

The gap between official and parallel market rates has narrowed, with 44% of respondents saying it has shrunk significantly but still exists. However, 30.1% see it as unchanged or wider, and just 9.4% say the rates have largely converged.

Much of the doubt centres on the institutions expected to protect the reform. The report indicates that 47.3% of respondents rate the government’s commitment to limiting central bank financing as having low or no credibility.

In addition, 52.3% see the National Bank of Ethiopia (NBE) as largely not independent or effectively subordinate to fiscal objectives, compared with 5.6% who believe it exercises meaningful independence. 

Politics is the other worry, with 36.8% naming political economic pressures, such as electoral cycles and regional fiscal demands, as the single greatest threat to macroeconomic discipline, and a further 36.8% calling them a significant risk.

The doubts do not amount to opposition to reform. Only 3.4% of respondents think the pace or sequencing of reforms should be reconsidered, even though 65.8% say tax and revenue measures under the IMF-supported programme are adding noticeably to prices. 

Naser notes that most experts appear to accept these short-term costs as part of the fiscal adjustment needed for stability. The disagreement, in other words, is about whether the reforms will be kept up, not whether they were needed.

To protect the regime, the report recommends sustaining the market-determined system while avoiding abrupt reversals and unnecessary intervention, and continuing to narrow the official-parallel rate gap through transparent foreign exchange allocation.

 It also calls for stronger reserve management to rebuild import cover and, more broadly, a formal coordination mechanism between the government and the NBE and consideration of an independent fiscal council. 

The author stresses that the views are his own and do not necessarily reflect the EEA’s official position. The survey also captures only members who chose to respond, 61.3% of whom are based in Addis Ababa, and the author acknowledges the response rate was modest.