Ethiopia's Currency Regime Shift and Economic Growth

This guide discusses the recent shift to a floated exchange rate regime in Ethiopia and its implications for inclusive development and resilient growth. Produced by USAID's Ethiopia Resilience Learning Activity, the document captures insights from a panel discussion featuring economists and industry experts, focusing on how new monetary policies are reshaping opportunities and risks in the country. The brief outlines the limitations of Ethiopia's previous economic model, which relied heavily on public investment, and highlights the need for reforms to stimulate private sector growth. It details the challenges faced by firms due to high inflation, foreign exchange shortages, and liquidity constraints, emphasizing the importance of economic liberalization. The document also addresses the potential outcomes of gradual liberalization and the necessity for supportive measures to stabilize the financial system. Strategies for firms to navigate the economic landscape and the critical role of maintaining peace and security for investor confidence are also discussed.