(Bloomberg) -- Ethiopia plans to float its currency, the birr, as part of ongoing macroeconomic reforms, according to Prime Minister Abiy Ahmed.
The Horn of Africa country has had a managed floating exchange rate system that’s caused a shortage of dollars critical for imports and the repatriation of profits for foreign investors.
One of the program’s objectives is “correcting foreign exchange distortions and solving the structural balance of payments deficit problems,” Abiy said in a lengthy policy statement posted on X, formerly Twitter.
Abiy said a market-based FX regime is critical to relieving currency shortages, removing constraints to private sector investment and growth, and aligning the prices of imported and exported goods and services with market realities.
The announcement comes a day before an International Monetary Fund meeting at which the Washington-based lender is expected to discuss Ethiopia’s request for a new financing program, Bloomberg News reported on July 25.
Abiy told parliament this month that he expects talks with the IMF and the World Bank to unlock more than $10 billion in financing in the coming years, without providing details.
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