The surprise devaluation of the Ethiopian birr on August 31, 2010 was apparently undertaken to boost export performance and bring about structural change in the economy. This was a bold and important move because it indicates recognition by the Ethiopian government that its policy setting had been a factor in inhibiting Ethiopia’s external performance and industrial development.
In a commentary published by AddisFortune weargue that, by itself, this move might fall short of addressing the trade problem, which is manifest in a low trade share of GDP and a yawning trade deficit and which reflects numerous and complex factors, while raising other questions regarding the government’s approach to macroeconomic stability that now need to be answered.