ESSP II Working Paper 9 "Economic Implications of Foreign Exchange Rationing in Ethiopia" by Paul Dorosh, Sherman Robinson, and Hashim Ahmed.
Abstract: Ethiopia enjoyed remarkable economic growth from 2004/05 to 2008/09, in large part due to increases in foreign transfers and capital inflows combined with expanded domestic credit to fund major increases in private and public investments in infrastructure and housing. However, this rapid growth was accompanied by a major appreciation of the real exchange rate (by 34 percent between July 2004 and July 2008) that reduced incentives for domestic production of exportables and non-protected importables. Moreover, major external shocks to the economy (including increases in world prices of fuel in 2007 and early 2008) exacerbated foreign exchange and macro-economic imbalances. Beginning in March 2008, access to foreign exchange for imports has been restricted (rationed) to avoid excessive drawdown of foreign exchange reserves. Find more ESSP Working Papers on the Publication page. |