International Monetary Fund (IMF) forecasts foreign currency reserve of Ethiopia will reach four billion dollars by the end of the existing fiscal year (2019/20), which means six months later. By the end of the past financial year, the country’s forex reserve was just USD2.8 billion.
Reserves are expected to improve to around four billion dollar by end 2019/20, sufficient to cover two months of prospective imports, due to higher external financing flows, including from the Fund, IMF said. It is to be recalled that the Fund approved three billion dollars loan a month ago.
IMF, in its latest press release following the conclusion of its Article IV Consultation with government of Ethiopia, applauded a comprehensive approach adopted by the Horn of African country to address the exchange rate overvaluation and foreign exchange shortages.
Executive Board of the Fund, in its assessment, recommended that priority should be placed on increasing exchange rate flexibility, reducing inflation, strengthening competitiveness, and rebuilding international reserves.
The Fund also projected that the economy of the country will grow by 6.2Pct in 2019/20, which is four percentage points lower than the plan set to be achieved by the government.
“The macroeconomic policy measures envisaged under Home Grown Economic Reform Plan to address external imbalances, debt vulnerabilities, and inflation are expected to contribute to a slower growth in real GDP of 6.2 percent in 2019/20,” the Fund said.