April 11, 2026
Borkena
Toronto – The World Bank this week released its Economic update for Africa. It sees currencies are gaining momentum due to “more-accommodative (global and domestic) financial conditions, increased foreign exchange inflows—stemming from market reforms in several countries and rising foreign direct investment—as well as higher export earnings driven by favorable commodity prices and a broader weakening of the U.S. dollar.”
But that was not the case with the Ethiopian birr. The report painted it as one of the weakest along with the South Sudanese pound.
“The weakest performing currencies in 2025 were the Ethiopian birr and the South Sudanese pound, each losing about 18 and 15 percent of their value year‑on‑year, respectively, by end‑December.,” the report said.
The World Bank linked South Sudan’s currency depreciation mainly to “war‑related disruptions to the oil pipeline running through Sudan, which severely constrained foreign exchange inflows.” “Mismanagement of oil revenues” and “fiscal discipline” are also among the factors for the depreciation in Africa’s youngest country.
The factor to Ethiopian birr depreciation – which the report says is losing 18 percent of its values year-to-year – is related to “pressure” forex market liberalization effort. The rate of losing is worse than South Sudan which is losing 15 percent of its value.
The report said “the parallel market premium [in Ethiopia] has risen to the high teens since the end‑December 2025.”
Policy responses from the National Bank of Ethiopia do address the problem but do not seem to be working. Ethiopian economists have not responded, at the time of this writing, to the report from the world bank.
Ethiopia introduced marcro-economic reform in July 2024 including a market based forex regime. In less than six months, birr lost over 100 percent of its value at the time. Currently, $US dollar is selling for well over 154 birr. It was fetching only 57 Ethiopian birr before the introduction of the reform. It was widely believed at the time that Prime Minister Abiy Ahmed’s administration succumbed to IMF and World Bank pressure to significantly devalue Ethiopian currency as a condition to access the Extended Credit Facility (ECF).
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