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Toronto – Ethiopians have been enduring burdensome costs of living – especially in the capital Addis Ababa – for several years now. But the Macro-economic policy reform Abiy Ahmed Administration introduced this week with what appears to be from a policy imposition from the IMF and the World Bank ( and he calls the reform as “homegrown economic growth plan”) leading to the devaluation of Ethiopian Birr is taking the pains of cost of living to a new level. But the government – like the IMF, the World Bank and Major Western powers – is calling it a “bitter medicine” to overcome the challenges that the Ethiopian economy has been facing.
When the market based foreign currency exchange rate was introduced earlier this week, state-owned banks devalued the Ethiopian currency by about 17 percent and started to sell US$1 to 75 Ethiopian Birr. Today, banks have been selling to well over 91 birr and the purchasing power of birr is said to have dropped by 58 percent. In the black market, US$1 is selling for over 140 birr.
Residents of Addis Ababa are already suffocated with the new level of price increases. “There is nothing that has not increased,” BBC Amharic cited residents as saying.
Just a week ago, Onion used to sell about 40 Ethiopian birr in Addis Ababa. The price spiked to over 70 birr this week, according to a BBC Amharic report. Five liters of cooking oil was about 1100 birr last week. It is now selling for 1500 birr.
Yesterday, Teff, a staple food, was selling for 16,000 birr per hundred kilograms. It is now over 19,000 birr.
Sharp price increases have also been observed for items in the construction industry including cement.
The government has been reportedly engaged in arresting businesses owners in the capital Addis Ababa in connection with share price increases.
Prime Minister Abiy Ahmed on Thursday had a meeting with “stakeholders” to explain about his newly introduced Macro Economic Policy reform measures. He stated, among other things, that his government will take measure against businesses that are making “unreasonable” price increases.
Their businesses have also been sealed.
So far, thousands of business owners are already arrested in the capital Addis Ababa.
The Ethiopian government has pledged to make a 300 percent salary increase for lower income earners ( for those who are making 1500 birr a month). However, there are remarks that the pledged increase is of symbolic value. The number of people employed in the public sector is not that significant. Also, there is anticipation that the price of consumer goods will continue to soar as Ethiopian birr continue to lose against major currencies.
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