Federal Democratic Republic of Ethiopia is home to 73 million citizens of whom close to approximately 50 percent live below the poverty line. Ethiopia at times has had difficulty with famine as upwards of 2.6 million Ethiopians face starvation if food assistance does not arrive shortly at time of currency review. The country is ranked near the bottom of world country rankings from the United Nations quality of life index.
Economic Statistics
Total GDP as measured by purchasing power parity stands at $60 billion USD (2005) with corresponding GDP/Capita at $800 USD. Total GDP as measured by market prices stands at $9 billion USD (2005). GDP growth fell 2 percent in year 2003, year 2003-04 rebounded smartly at 11.6 percent. Real GDP growth 2005 at 7.3 percent, 2006 is estimated at 5 percent. Inflation for 2003 came in at 15 percent, 2005 at 6.8 percent, 2006 is projected at 6 percent. Foreign exchange reserves at $1 billion USD (2005). Current account is in deficit at 4 percent of GDP (2004) reflecting a large trade shortfall. Agriculture consists of 50 percent of GDP employing 80 percent of the workforce. No oil production, natural gas reserves at 12.4 billion cu m (2005).
CURRENCY: ISO Symbol ‘ETB’, Ethiopian birr. At time of review on February 13, 2006, the Ethiopian birr had an exchange valuation of 8.72 ETB to the US-dollar (USD) and/or 10.375 ETB to the Euroland euro (EUR). Floating exchange rate currency regime is in place. Since October 24, 2001, exchange rates are determined on a daily basis via interbank transactions regulated by Ethiopia’s Central Bank.
CURRENCY HISTORY: historical exchange quotes include year 2005 at 8.72 ETB to the USD, 2004 at 8.68, 2003 at 8.6, 2002 at 8.56, 2001 at 8.45, April 2000 at 8.06, year 1998 at 7.5, 1997 at 6.86, 1996 at 6.42 and 1995 at 6.32. Prior to May 1993, the birr was pegged at 5 ETB to the USD. The birr banknotes came into inception in 1903, previously the birr was the local name for the Maria Theresa thaler. The Italian lira then came into Ethiopia’s circulation with annexation by Italy in 1936. By 1941 with liberalization, the British East African currency (shilling) replaced the lira. In 1945, the birr was reintroduced into circulation at 2 shilling to 1 birr.
CURRENCY FORECAST: regional stability is now prevalent unlike previous years with border disputes with its neighbor Eritrea. Ethiopia’s economy maybe held back due to AIDS, drought, etc. World coffee prices are higher, coffee exports represent 60 percent of the country’s earnings. Ethiopian coffee sales can affect currency exchange valuation of the birr, New York coffee recently quoted at $1.07 US/lb. In addition to coffee, Ethiopia has potential in cattle industry, energy resources (coal, natural gas – development of the Ogaden basin). Continued economic progress (strong coffee prices, increased harvest yields) and regional stability will help the birr to continue to perform well in the short-term.
