quarterly macroeconomic review third quarter 2020 · 2020. 12. 8. · quarterly macroeconomic...

Disclaimer: This report represents solely the views, analysis, and judgement of the Cepheus research team and does not necessarily reflect the views or opinions of the Fund’s Managing Partners, Advisors, or Investors.

Recent Developments and Outlook The conflict that has broken out in Ethiopia over the past few weeks appears—based on recent developments—likely to be short-lived in its duration and confined in its geographic scope. Under these circumstances, adverse impacts on the macroeconomy should be quite limited, in our view, especially since Government is also pushing ahead with key economic reforms, including privatization. While we will revisit our macro projections more fully in early 2021, in line with evolving developments, this note presents the tentative signs of a V-shaped recovery that were emerging before the conflict arose and that we think will gain momentum in the period ahead. Compared to our last review, we now see somewhat slower growth and somewhat higher inflation for this year, but expect a still favorable outlook with respect to the budgetary stance, banking activity, and balance of payment flows. § Growth: The recently released growth figure of 6.1 percent for 2019-20 shows economic

activity held up much better than expected, as agriculture and construction (GDP’s two largest components) were largely spared from COVID shocks. For this fiscal year, we forecast growth of 4.1 percent on expectations of weaker crop yields due to locusts and a harvest season that is likely to be at least partly disrupted. The IMF’s projection of zero GDP growth (even pre-conflict) exaggerates the impacts of COVID-related shocks, in our view.

§ Inflation: The central bank has stopped financing government deficits since end-June, which is helping control the monetary sources of inflation; unfortunately, other factors are keeping inflation at elevated levels (~19%). We now project inflation of 13 percent by mid-2021, and see prospects for single-digit inflation emerging only in the second half of 2021.

§ Fiscal policy: Even with large government spending increases this year, the budget deficit is worsening only slightly (from 2.6% to 3.1% of GDP) and the debt-to-GDP ratio staying below 60 percent despite multiple shocks. A further deficit deterioration linked to the conflict seems unlikely given what are already large allocations in the budget for defence & security. Debt service relief from external lenders is reducing repayment burdens in 2020 and 2021.

§ Banking: Aided by the recent currency conversion, banks should see another year of good performance (already apparent in their first quarter figures), and we now expect 22 percent deposit growth and 18 percent lending growth. A gradual withdrawal of loose monetary conditions, a likely uptick in NPLs, and reduced loan demand in some areas will be key challenges, but these should moderate—not hold back—overall growth in the sector.

§ Balance of Payments: Helped by double-digit export growth, a recovery in remittances, improved FDI (presuming privatization), and large on-going inflows of grants and loans, foreign exchange reserves should surpass $4bn (3.4 months import cover) by mid-2021.

§ Exchange rate: The annual rate of depreciation reached a high of 28 percent in October 2020,

but the Birr has since begun to show a slower pace of change, in line with moderating inflation and USD weakness vs other global currencies (both of which lessen the need for Birr depreciation). As policy efforts are likely to still focus on avoiding any further over-valuation of the currency, and considering the anticipated path of inflation from here on, we see the Birr at near 39 per USD by end-2020 and just under 42 per USD by mid-2021.

Quarterly Macroeconomic Review Third Quarter 2020

RESEARCH & ANALYTICS

Inflation & Exchange rates: End Quarter

Inflation Birr/USDJune 2020 21.5% 34.9

September 2020 18.7% 36.7Dec 2020 18.8% 38.6

March 2021 15.2% 40.1June 2021 12.5% 41.6

Sources: CSA, CBE, and Cepheus projections

ETHIOPIA: Key Macro Indicators

2019-20 2020-21Actual Proj

GDP growth 6.1% 4.1%Investment/GDP 30.8% 31.0%Nominal GDP, Birr bns 3,374.3 4,124.1 Nominal GDP, USD bns 106.8$ 106.6$

Bank deposits, Birr bn 1,043.0 1,272.4 Bank credit, Birr bn 1,068.8 1,261.8 Deposit growth, % 16.0% 22.0%Credit growth, % 21.0% 18.1%

Fiscal balance, %GDP -2.6% -3.1%Public debt, %GDP 51.4% 54.9%

Exports, USD bns 3.0$ 3.4$ Imports, USD bns (13.9)$ (14.9)$ Service exports, $ bns 4.7$ 4.9$ Remittances, USD bns 4.7$ 5.1$ Grants, USD bns 1.5$ 1.5$ Current account, %GDP -3.7% -4.0%FDI, USD bns 2.4$ 3.5$ Net Loans, USD bns 1.7$ 1.5$ FX reserves, USD bns 3.2$ 4.2$

Sources: NPC, NBE, IMF, and Cepheus projections



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Recent Developments:

§ Growth and Activity Indicators: Recently released GDP data from the Planning and Development Commission show economic growth held up much better than expected in 2019-20, as the dominant agricultural and construction sectors were not heavily affected by the pandemic and COVID impacts were concentrated in the hospitality, airline, and manufacturing industries—which collectively make up a relatively small share of Ethiopia’s GDP. Real GDP showed a 6.1 percent expansion during the fiscal year (in line with our expectations), reflecting a combination of 4.3 percent growth in agriculture, 9.6 percent growth in industry, and 5.3 percent growth in services. Looking more closely at specific sub-sectors, growth was strongest in mining (91%), health care (13%), finance (10%), construction (10%), manufacturing (10%) and real estate (10%), while areas showing the lowest growth rates were in hotels & restaurants (2.2%), education (1.8%) and transport services (1.1%). In terms notable changes from the prior year, the sharpest declines in growth were witnessed in transport services (whose growth fell from 21 to 1 percent), hotels and tourism (from 9 to 2 percent), and in construction (from 15 to 10 percent). Last year’s GDP growth is the lowest seen in 17 years, though it remains among the highest rates achieved globally (the second highest per the IMF’s October 2020 WEO database).1 Even if questions were raised about the reliability of the latest growth figures (given long-standing weaknesses in the sampling/coverage/deflators used in Ethiopia’s national accounts statistics), other more easily measured non-GDP activity indicators now available for the full year also point to economic expansion in most areas, and in magnitudes that are not out of line with the reported growth figure. Most notably, real growth rates were 9% in bank lending, 14% in exports, 12% in ECX traded commodities, 7% in electricity generation, and 6% in telecom subscriber volumes.

§ Investment: Overall investment fell to near 31 percent of GDP in 2019-20, a

significant drop from the 35 percent seen the year before and the 37 percent average of the past five years. This is the lowest rate in over a decade and parallels drops registered in GDP growth (from 9% to 6%), in foreign investments (from $3bn to $2.4bn), and in capital imports (from $5bn to $4.1bn). Some indicators of public sector investment did, however, show growth in real terms, such as government capital expenditure (which rose from Birr 86bn to Birr 112bn, a 30 percent increase in nominal terms and roughly 11 increase in real terms). Overall, the drop in private investment appears to have been more pronounced than the drop in public investment.

§ Inflation: After peaking at 22.3% in July, inflation has been on a downward

trajectory for most of the past four months, though it showed a slight uptick

1 Cross country growth rates are not quite comparable, given Ethiopia’s July-June fiscal year. Our comparison is Ethiopia’s 2019-20 growth (6.1%) versus others’ 2020 calendar year IMF projection.



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to 19.3 percent in October 2020. On the positive front, month-on-month inflation has fallen sharply in recent months, having dropped from 2.9 percent in June (equal to a 40 percent annualized rate) to just 0.4 percent in October (annualized rate of only 5 percent). The moderating inflation readings are being driven by slower price increases for vegetables, housing, and utilities (all now in the mid to high-teens), while items with large weights in the index—such as grain cereals, beverages, and transport—still show inflation rates above 20 percent. With the monetary sources of inflation apparently becoming much less significant, thanks to zero central bank credit to the government in the first quarter, it appears supply side shocks are the more dominant factors behind the still elevated inflation rates of recent months. Given lags in inflation transmission, the tighter controls seen recently on NBE financing and the current low month-on-month rates should—barring additional shocks—begin to show up in better inflation numbers by early to mid-2021.

§ Monetary policy: A surprise currency conversion enacted at the start of the

Ethiopian New Year (September 2020) has proceeded relatively smoothly, with banks registering close to 2.5 million new depositors and benefitting from substantially increased deposits within a short period of time. The currency conversion is unlikely—by itself—to be of major macroeconomic significance, but it may have helped demonetize some past stock of illicit funds (as intended), it may bring some net income gains to the central bank (as much as Birr 14bn, for example, if say 10 percent of the previous Birr 140bn cash in circulation remains unreturned), and it could help accelerate the adoption of non-cash, digital payment habits for the period ahead (given daily cash withdrawal limits that came out alongside the currency conversion). Bank liquidity conditions are also much improved thanks to the influx of new deposits (see below). As of end-September 2020, at which point the currency conversion was still not yet finalized, moderate growth was being registered in broad money supply—namely 19 percent from year-ago levels or roughly in line with inflation.

§ Banking developments: Commercial bank deposits rose by Birr 105bn in the

first quarter of the fiscal year, which is six times the increase seen in the same period last year and amounts to 8 percent growth for the quarter and 25 growth from year-ago levels. Deposits have now reached Birr 1.148 trillion, with 57 percent of this total at public banks and 43 percent at private banks. Total financing provided by the banking system (loans plus banks’ holdings of corporate bonds, NBE Bills, and T-Bills) reached an estimated Birr 1.15 trillion at end-Sep 2020, up around 4 percent for the quarter. Given the influx of deposits over the past quarter, this total bank financing figure is now equivalent to 98 percent of total banking system deposits vs a similar ratio of 103 percent in June 2020—pointing to improving liquidity conditions in recent months. Based on monetary data for the year to September 2020, the private sector remains the main beneficiary of bank lending growth, with an



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estimated Birr 145bn of the Birr 213bn credit increase (roughly 61 percent) going to private borrowers as opposed to Government or SOEs. In terms of other banking indicators, the sector registered 23 percent growth in assets, 11 percent growth in paid-up capital (to Birr 83bn), and 15 percent growth in branches (to 6,124 nation-wide branches as of September 2020 or an increase of around 159 branches over the quarter). Private banks continue to show strong lending growth (up 8 for the quarter and 36 percent year-on-year), while CBE has strengthened its deposit mobilization (up 10 percent in the first quarter) but was less active on the lending side (up 2 percent in the first quarter).

§ Fiscal policy: Budgetary performance is also off to a strong start with record-

breaking Q1 revenue collections this year: tax receipts reached Birr 74bn in the first three months, above government’s targets and a 30 percent jump from year-ago levels. Government expenditure for the quarter reached Birr 98bn, and the resulting quarterly budget deficit—after accounting for Birr 6.4bn of grant inflows—was near Birr 17bn. The domestic borrowing needed to cover this deficit was fully covered by Treasury Bill issues, thanks to an auction market that has seen Birr 51bn in gross sales this past quarter and Birr 95bn cumulative gross issues to end-September (including longer maturities that now include a mix of 28-day, 91-day, and 182-day T-bills).

§ Debt: Public debt rose to $54.9bn as of June 2020, up by about $1.2bn from

year-ago levels. Relative to GDP for FY 2019-20 (Birr 3,374bn or $106.8bn), public debt-to-GDP stands at 51.4 percent, a near 8 percentage points drop from June 2018 when the ratio peaked at 59 percent of GDP. Looking only at external debt, this now stands at 27 percent of GDP, also down from its peak of 31 percent seen in June 2018.

§ Trade: Exports continue to show double-digit growth and rose by 16 percent

from the same period last year. In a historic first, gold exports exceeded coffee this past quarter, bringing in $203mn vs $185mn for coffee. Other notable export categories showed quarterly inflows of $102mn for flowers (down 11 percent from same period last year), $95mn for chat (up 2 percent), and $58mn for oilseeds (up 8 percent). Manufactured exports fared poorly this past quarter, declining around 12 percent from year-ago levels due to drops in textile, leather, and meat exports. With respect to imports, their levels are down 7 percent from year-ago, with sharp drops continuing to be seen in fuel imports ($377mn for the quarter, and down 36 percent due to lower global oil prices), raw materials (down 18 percent), and capital goods (down 5 percent). Exceptions to the generally negative growth rates seen for most import categories were seen for food items (up 25 percent), textile sector inputs (up 16 percent), and some capital goods components.

§ Balance of payments (BOP): Balance of payments developments were much

less adverse than initially feared, with final figures for the 2019-20 fiscal year



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showing the central bank’s fx reserves loss limited to only around $200mn last year (from $3.4bn at end-June 2019 to $3.2bn at end-June 2020). Per NBE data, the overall balance of payments deficit for the year was somewhat larger at around $700mn (given accounting conventions that also take into account changes in the banking system’s foreign liabilities). The overall BOP deficit reflected a current account deficit of $4bn (trade deficit of ~$11bn, a roughly balanced services account, and net transfers of $7bn), a capital account surplus of $4bn (mainly FDI of $2.4bn and net foreign borrowing of near $2bnbn), and a large negative errors and omissions figure of almost $1bn. Last year’s BOP outturns were notable for: (1) a large $1.5bn improvement in the trade deficit; (2) an improvement in net services income (service exports fell by 6 percent due to COVID impacts on tourism but service imports fell by an even larger amount); (3) a 17 percent drop in remittances (from $5.7bn to 4.7bn); (4) a 20 percent drop in FDI (from $3.0bn to $2.4bn) and; (5) a 30 percent drop in official grants (from $2.1bn to $1.5bn). For the first quarter of this fiscal year, the trade deficit stood at $2.6bn (versus $3bn in the same period last year or 13 percent lower), while other available Q1 data points show $0.5bn in FDI inflows. Fx reserves rose slightly to $3.3bn at end-September, suggesting net positive BOP flows during the most recent quarter—as was also the case in Q4 of 2019-20.

§ Exchange rate: The annual rate of depreciation reached a high of 28 percent (from year-ago levels) in October 2020, but the Birr has since begun to show a slower pace of change (24 percent for November), in line with moderating inflation and USD weakness versus most global currencies. Relative to the Euro and Pound, the Birr is now 35 percent and 28 percent depreciated respectively from year-ago levels. The average exchange rate movement averaged 66 cents per month in the four months from July-October 2020, but this has moderated to 50 cents per month in November 2020 (which had been our average monthly expectation for the quarter). As before, the annual depreciation rates of nominal depreciation are at least matching recent year-on-year inflation rates, suggesting again that the central bank’s exchange rate policy seeks to at least maintain a constant real effective exchange rate (REER) that can prevent a deterioration in external competitiveness.

§ Sovereign bond and Market Ratings: Reflecting the reactions of foreign

bond-holders, the prices and yields of Ethiopia’s sovereign bond moved significantly following the onset of the conflict in November. The bond’s yield had previously declined from close to 7 percent at end-June 2020 to 6 percent as of early November, but the start of the conflict on November 3 has since brought about a sharp spike in yields. As of end-November, the latest yield stands at close to 8 percent, which is indicative of the USD interest rate now needed to attract foreign bondholders. No ratings action has been taken in the last quarter by the three global rating agencies: Ethiopia’s rating by Moody’s remains at ‘B2’ with a negative outlook, while Standard and Poor’s and Fitch Ratings also retain their long-standing ‘B’ ratings.



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Macroeconomic Outlook: Economic activity indicators in the first few months of the fiscal year showed mostly positive growth prospects, with signs of a V-shaped recovery emerging even in COVID-hit areas such as tourism, government revenue, and industrial park exports. While there remain uncertainties regarding the conflict’s ultimate resolution, its apparent short duration (based on recent developments) and limited geographic scope imply minimal macro impacts. Accordingly, even though we now forecast slightly lower growth and somewhat higher inflation for this year, we expect the outlook to remain favorable with respect to the budgetary stance, banking activity, and balance of payment flows. § GDP growth: We expect GDP growth will be somewhat lower this year than

our previous forecast of 5.5 percent. This revision is driven solely by our updated expectations for this year’s crop output, and we see no strong basis—yet—for reducing our previous projections for growth in industry (mainly construction) and in service sectors.

o For agriculture (38% of GDP), the outlook had generally been quite

positive till the end of the rainy season (September 2020), reflecting a combination of favorable rainfall, improved fertilizer usage, and some expected increase in acreage farmed (following a ‘leave no land uncultivated’ campaign launched in most regions). On this basis, we had expected that total crop output was likely to rise from last year’s 335mn quintals to a level at or above 350mn for this year, for around 4 percent growth. However, more recent developments suggest that the locust invasion has affected much larger areas of farmland (previously estimated around 200,000 hectares but now potentially as much as 700,000 hectares) and lasted for longer periods in some areas. Moreover, harvest activity which normally takes place in November and December is likely to be at least partly disrupted from the recent conflict in parts of northern Ethiopia, having some ultimate impact on crop yields. Reflecting these considerations, plus feedback from experts in the agricultural sector, we think overall crop output is likely to remain broadly at the levels recorded last year—thus registering near zero growth—which would have the effect of pulling down overall growth.

o In the construction sector (18% GDP), we retain our expectations that the significantly increased government budget will be bringing many new projects and hence continued strong activity in this sub-sector. Budget execution trends so far are in line with these expectations given trends in quarterly government spending. Off-budgetary public sector projects (especially in housing) will also provide further stimulus, while rising cement production and still-strong growth bank lending for the housing/construction sector (up 125 percent year-on-year and now 11 percent of total loans) suggests continued on-going expansion in the



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private segment as well. Growth in the high single-digits thus remains a strong prospect for FY 2020-21.

o For wholesale and retail trade (14% of GDP), activity indicators in the

first quarter (ECX trading, bank lending, exports) are supportive of low to mid-single digit growth in this sector. While crop related trading may be somewhat affected, other trading activities linked to consumer goods, construction activities, exports, and retail can still support moderate growth in this sub-segment.

o Other sub-sectors that should continue to show gradually strengthening

activity levels, including health (given stepped-up allocations/activities this year), education (given the re-starting of educational institutions throughout most parts of the country), and public administration (with implementation of this year’s expanded budget). Financial services activity shows continued strong growth in the first quarter (loans up 31 percent) while mining activity (though still a tiny share of GDP) should also show very high rates of growth judging from gold exports and a number of new projects poised to start operations.

o The most notable risk to the macro outlook of course concerns the

direction ultimately taken in the resolution of the recent conflict, and the potential for on-going disruptions that may affect the broader economy. Also, shortfalls in government funding (due to weakened revenue generation capabilities, lower external loans, constrained domestic funding or delayed privatization) may reduce government spending and thus hold back the public sector related drivers of GDP growth.

o Overall GDP growth: Considering all of the above, we reduce our

expectation for GDP growth to 4.1 percent for FY 2020/21; this reflects anticipated growth rates of 0%/9%/4% for agriculture/industry/services and their respective weights of 33%/29%/38% in real GDP. Recent growth forecasts by external observers (mostly before the conflict) range from a low of zero by the IMF, which we think exaggerates the likely severity of COVID-related shocks, to 2 percent by Moody’s, 3.3 percent by the World Bank, 4.5 percent by Standard & Poor’s, and 8.5 percent by the Government. A ‘consensus’ average (excluding our projections) would suggest growth of 3.1 percent for 2020-21.

§ Inflation: While sharp drops in recent month-on-month inflation bode well

for the direction of future inflation, the still high inflation levels over the past five months of the fiscal year imply a longer disinflation path than we had previously expected. Though we had expected inflation to fall by 16 percent by December and 9 percent by June 2021, the latest inflation readings and the stance of macro policies now suggest these figures will be several percentage points higher for the remainder of the fiscal year. We now



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forecast year-on-year inflation of 18 percent at end-December and 13 percent at end-June 2021, with the prospect of single-digit likely to emerge only in the second half of 2021.

§ Fiscal policy and debt: Fiscal policy looks to be on track and in line with the budget, given impressive revenue outturns recorded in the first quarter (Birr 74bn, 105 percent of target). In a very positive development, the now one-year old, market-based Treasury Bill market has provided the domestic financing needed to cover the first quarter deficit—without resort to central bank credits to the government. With first quarter revenue in line with targets (and this continuing to be the case for October 2020), there appear limited risks of major fiscal slippages for the period ahead. A further deficit deterioration linked to the conflict seem unlikely, in our view, as significant allocations were already in the budget this year for defence and security outlays. Humanitarian spending needs that will arise from the recent conflict are also likely to be contained through existing budgetary outlays (including re-allocations) as well as extra external assistance. Reflecting all of the above, we anticipate the deficit will remain broadly in line with the budget (near 3 percent of GDP) and that total public debt will reach around 55 percent of GDP by June 2021. Overall, it is notable that despite multiple shocks faced this year (including the recent conflict, the COVID pandemic, successive locust invasions), the debt-to-GDP is trending upwards only slightly and not showing any rapid or alarming increases.

§ Monetary developments and banking: After substantial loosening in response to the COVID pandemic, the rest of the fiscal year is likely to show moderating growth rates in both reserve money and broad money. A slowdown in broad money growth together with a large domestic borrowing requirement for budget would normally leave limited financing for the private sector; this had been our expectations at the start of the fiscal year and explained our previously low 15 percent credit growth projection for this year. However, the recent currency conversion has provided unexpected and ample liquidity to the banking sector as a whole, and so concerns about a squeeze on credit to the private sector our now less pressing. Moreover, while some sub-sectors of the economy may show reduced demand for loans, trends in the first quarter suggest that annual credit growth of close to 20 percent is still possible for the fiscal year. Potential challenges in the sector include a likely uptick in NPLs, as some COVID-affected credits become recognized as non-performing, but the low initial NPL ratios at most private banks should allow them to withstand modest increases given on-going growth in their overall loan books and rising revenues. Looking at broader trends, the financial sector is beginning to see the establishment of new local banks but the entry of other non-bank service providers—despite regulatory loosening—remains in its very early stages with still limited activity to date.



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§ Balance of payments: We largely retain the BOP projections from our last quarterly report, including our expectations of an improving balance of payments position aided by significant currency depreciation and a still favourable outlook in global commodity markets (most notably, low oil prices, high coffee prices, and high gold prices). As before, we see goods exports reaching $3.4bn (14 percent growth from last year) and services exports at $14.9bn (a 7 percent increase), while we make slight adjustments for remittances (expected at $5.1bn, a 6 percent increase), and official grants of ($1.5bn, in line with last year). On the capital account, we adjust our FDI projections to $3.5bn (accounting for Q1 trends and with expectations that privatization transactions take pace by June 2021), and project net government borrowing of near $1.7bn in line with budget plans. As part of the COVID-related Debt Service Suspension Initiative (DSSI) from the international community, debt service relief from official multilateral and bilateral creditors is expected to reduce Ethiopia’s external loan repayment burdens in 2020-21, covering as much as $300mn-$500mn in government dues over a 12-month period, by our estimates. Reflecting these anticipated developments, we project that fx reserves will exceed $4bn by June 2021, compared to the $3.2bn stock of fx reserves at end-June 2020. These increased net balance of payments inflows should allow for somewhat improved fx supplies to the private sector over the course of the year. However, with the Birr still some distance from its market rate, and given the gradual approach taken to broader exchange rate system reform, delays in accessing foreign exchange will of course still remain the norm—at least for this year—for most businesses in most sectors.

§ Exchange rate: After monthly depreciations of 33/90/59/80 cents in July/August/September/October, the Birr has moved by just 50 cents this past month (November). For the five months since the start of the fiscal year, the Birr’s depreciation has now averaged 62 cents per month. With moderating inflation and significant USD depreciation versus other global currencies in recent months (both of which lessen the need for Birr depreciation), we are inclined to expect 50 to 60 cents of monthly Birr adjustments—on average—for the period ahead. This translates into year-on-year depreciation rates of around 20 percent and would be sufficient to fully cover anticipated rates of inflation. Accordingly, we see the exchange rate at close to 39 Birr/USD by end-December 2020 and just under 42 Birr/USD by June 2021.

A summary of our full set of macroeconomic projections—covering the real, banking, fiscal, and external sectors—is provided in the attached Annex.



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ECONOMIC ACTIVITY: Recent Developments § The 2019-20 fiscal year was able

to register still-strong growth of 6.1 percent (versus an annual average of 8.5 percent in the prior four years) mainly because two-thirds of the year (July-February) was not affected by COVID-related shocks, while those sectors most impacted by the pandemic towards the end of the fiscal year were generally small segments of the economy.

§ The reduced growth reflects notably lower growth rates in transport, construction, and hotels & restaurants.

§ The 6.1 percent growth rate

marks the lowest seen in 17 years, or since 2003.

§ Based on the 19 sub-sectors by

which Ethiopia’s GDP data is reported, mining showed a near doubling of output (91% growth), though it makes up only a tiny share of overall GDP.

§ Taking a five-year perspective, the fastest growing sub-sectors in recent years have been construction, manufacturing, finance, transport, and health and social services.

Figure 1B:Sub-Sector GDP Growth Rates: A Five-Year Overview

Ranked by growth in 2019-2020

SUB-SECTORS 2015-16 2016-17 2017-18 2018-19 2019-20 5-Yr Avg1 Mining and Quarrying -3.3% -29.8% -20.8% -21.9% 91.4% 3.1%2 Health and Social Work 10.8% 7.0% 8.3% 14.3% 12.9% 10.7%3 Financial Intermediation 9.6% 18.3% 10.7% 13.6% 10.2% 12.5%4 Construction 25.0% 20.7% 15.7% 15.0% 9.9% 17.3%5 Large and Medium Scale Manufacturing 22.9% 19.2% 8.4% 10.0% 9.8% 14.1%6 Real Estate, Renting and Business Activities 3.7% 4.4% 6.2% 7.5% 9.5% 6.3%7 Electricity and Water 15.0% 12.4% 9.6% 4.0% 7.2% 9.6%8 Whole Sale and Retail Trade 8.2% 6.5% 11.4% 11.7% 6.4% 8.8%9 Crop 3.4% 8.2% 4.7% 3.0% 4.7% 4.8%

10 Forestry 2.2% 3.6% 3.3% 3.8% 3.9% 3.4%11 Animal Farming and Hunting -1.5% 4.2% 0.6% 6.0% 3.3% 2.5%12 Small Scale and Cottage Industries 2.5% 36.9% 3.7% 3.0% 2.6% 9.7%13 Other Community, Social & Personal Services 3.0% 4.5% 5.1% 6.3% 2.5% 4.3%14 Public Administration and Defense 7.4% 13.2% 8.9% 9.0% 2.3% 8.2%15 Private Households with Employed Persons 4.3% 3.5% 3.9% 2.5% 2.3% 3.3%16 Hotels and Restaurants 15.6% 0.1% 6.1% 9.0% 2.2% 6.6%17 Fishing 0.1% 0.5% 11.3% 2.3% 2.0% 3.2%18 Education 8.8% -3.2% 3.6% 3.5% 1.8% 2.9%19 Transport and Communications 13.7% 15.1% 6.4% 21.0% 1.1% 11.5%

Source: National Planning Commission

Figure 1A: Growth Over the Past Five Years--Main Economic Sectors and Sub-sectors

2015-16 2016-17 2017-18 2018-19 2019-20 5-Yr Avg

GDP growth: 8.0% 10.1% 7.7% 8.0% 6.1% 8.0%

Agriculture 2.3% 6.7% 3.5% 3.8% 4.3% 4.1%Crops 3.4% 8.2% 4.7% 3.0% 4.7% 4.8%

Industry 20.6% 20.3% 12.2% 12.0% 9.0% 14.8%Manufacturing 18.4% 24.7% 5.5% 7.7% 7.5% 12.8%Mining -3.3% -29.8% -20.8% -21.9% 91.4% 3.1%Construction 25.0% 20.7% 15.7% 15.0% 9.9% 17.3%

Services 8.7% 7.5% 8.8% 8.3% 5.3% 7.7%Hotels and Restaurants 15.6% 0.1% 6.5% 9.0% 2.2% 6.7%Transport & Communications 13.7% 15.1% 6.4% 21.0% 1.1% 11.5%Banking Sector 9.6% 18.3% 10.7% 13.6% 10.2% 12.5%Public Admin and Defense 7.4% 13.2% 8.9% 9.0% 2.3% 8.2%Health and Social Work 10.8% 7.0% 8.3% 14.3% 12.9% 10.6%

Source: National Planning Commission and NBE



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Recent Developments … GDP and Investment § The crop sector comprises the single

largest component of GDP at 21 percent.

§ Together with three other line-items in the GDP data—animal husbandry, forestry, and fishing—the combined ‘agriculture’ sector shows a 32 percent share in overall GDP, per the categorizations of the National Planning Commission.

§ The investment-to-GDP ratio fell

significantly to just 31 percent last year, well below the norms of 35-38 percent seen in prior years. This reflects declines in both domestic and foreign savings.

Table 2A: Investment and Savings--In Percent of GDP

Source:NPC

37.3%

38.4%

34.2%

35.3%

30.8%

32.0%

30.2%

32.3%

29.9%

26.8%

22.4% 22.4%

24.1%

22.1%

20.9%20.0%

22.0%

24.0%

26.0%

28.0%

30.0%

32.0%

34.0%

36.0%

38.0%

40.0%

2015/ 16 2016/ 17 2017/ 18 2018/ 19 2019/ 20

Investment, National Savings, and Domestic Savings (% of GDP)

Rate of Investment Rate of Gross National Savings Rate of Gross Domestic Saving

Figure 1C: GDP Composition in FY 2019-20

SUB-SECTORSPercent

ShareCumulative

Share

1 Crops 21.0% 21.0%2 Construction 20.8% 41.8%3 Whole Sale and Retail Trade 14.2% 56.0%4 Animal Farming and Husbandry 8.4% 64.4%5 Transport and Communications 5.2% 69.6%6 Large Manufacturing 4.8% 74.4%7 Real Estate & Renting Activities 4.3% 78.7%8 Public Administration and Defense 4.3% 83.0%9 Financial Intermediation 3.2% 86.2%

10 Forestry 2.8% 89.0%11 Hotels and Restaurants 2.4% 91.5%12 Education 2.2% 93.7%13 Small Scale and Cottage Industries 2.1% 95.8%14 Health and Social Work 1.2% 96.9%15 Other Community & Social Services 1.1% 98.0%16 Private Households w/Employed Persons 0.9% 98.9%17 Electricity and Water 0.8% 99.7%18 Mining and Quarrying 0.3% 99.9%19 Fishing 0.1% 100.0%

Source:National Planning Commission



12

Recent Developments… GDP and Investment:

§ We estimate that the decline in total

investment was concentrated mainly in private investment (judging from FDI and capital goods imports), though private investment is still considerably higher in absolute terms compared to public investment.

§ The fall in the investment ratio

parallels sizeable drops also seen—relative to GDP—in capital goods imports, government capital spending, and foreign investment.

§ Based on ICOR ratios seen over the past five years, about 4.4 percent of GDP in new investment is needed to generate an extra 1 percent of growth in the economy.

Figure 2B: Investment to GDP Ratios

2015-16 2016-17 2017-18 2018-19 2019-20Investment to GDP 37.3% 38.4% 34.2% 35.3% 30.8%

By Investor type:Public sector Investment-to-GDP 16.8% 14.4% 12.8% 11.0% 10.0%Private sector Investment-to-GDP 20.5% 24.0% 21.9% 24.2% 20.8%

By financing source:Domestic Savings to GDP ratio 22.4% 22.4% 24.1% 24.0% 20.9%External Savings to GDP ratio 14.9% 16.0% 10.6% 11.2% 9.9%

Source: NBE, NPC; Estimates for private/public composition of 2019-20.

Figure 2C: Investment to GDP versus Other Investment Indicators/Ratios

2015-16 2016-17 2017-18 2018-19 2019-20

Investment to GDP 37.3% 38.4% 34.2% 35.3% 30.8%

Capital goods imports-to-GDP 9.2% 7.4% 6.3% 5.2% 3.8%Govt capital expenditure-to-GDP 9.0% 8.3% 6.5% 6.5% 3.3%SOE borrowing to GDP 12.0% 13.0% 13.2% 12.6% 12.0%Foreign investment to GDP 4.4% 5.1% 4.4% 3.1% 2.3%Total bank financing to GDP 30.0% 31.8% 32.6% 32.8% 31.7%

Source: NBE

Figure 2D: Investment to GDP, Growth, and ICOR ratios

2015-16 2016-17 2017-18 2018-19 2019-20 5-Yr AvgInvestment to GDP 37.3 38.4 34.2 35.3 30.8 35.2GDP Growth rate 8.0 10.2 7.7 9.0 6.1 8.2ICOR ratio (efficiency indicator) 4.7 3.8 4.4 3.9 5.0 4.4

Non-Agricultural GDP Growth rate 11.1 12.41 10.19 11.78 7.08 10.5ICOR ratio for Non-Agric GDP 3.36 3.09 3.36 3.00 4.35 3.4

Credit growth rate 22% 25% 23% 28% 29% 26%

Source: NBE, NPC



13

Activity Indicators

§ Activity indicators besides GDP reveal expansion in multiple areas during 2019-20, most notably in bank lending, exports, power generation, and ECX traded commodity volumes.

§ Areas of weakness were

concentrated in tourism and FDI—both of which are so far relatively small shares of the economy.

§ The performance of Ethiopia’s largest companies—especially the 23 largest state enterprises—also suggests an expanding economy, given their 17 percent increase in sales and 6 percent rise in profits.

Figure 3A: Economic Activity Indicators: Last Fiscal Year vs Year Before

FY 2018-19 Full Year

FY 2019-20Full Year

Nominal growth

Real growth

Tax collections (Birr bns) 198.1 233.7 18.0% -2.7%

o/w Direct tax collections 120.2 128.60 7.0% -13.6% o/w Trade tax collections 77.9 104.92 34.7% 14.1%Bank deposits (Birr bns) 899 1,043 16.0% -4.6%

Bank lending (Birr bns) 456 590 29.3% 8.7%

Bank profits (private banks), Birr bns 13.998 16.988 21.4% 0.7%

Exports of goods ($mns) 2,667 2,988 … 12.0%

Imports of goods ($mns, excl aircraft) 14,242 13,815 … -3.0%

Industrial park exports ($mns) 141 165 … 17.0%

Industrial park employment 71,788 71,442 … -0.5%

Tourist arrivals 769,781 549,315 … -28.6%

Foreign Direct Investment ($bns) 3.1 2.5 … -19%

Fuel consumption (MT) 3,889,608 3,867,197 … -0.6%

Electricity power generation (Kwh mns) 13,840 15,192 … 9.8%

Ethio Telecom revenue (Birr bns) 36.3 47.7 31.4% 10.8%

Ethio Telecom subscribers (mns) 43.7 46.2 … 5.8%

ECX Traded Commodities (Birr bns) 33.9 40.0 18.0% -2.6%

ECX Traded Commodities (Tons) 680,280 761,914 … 12.0%

Govt Capital Expenditure (Birr bns) 85.7 112.0 30.8% 10.2%

SOE bond borrowing (Birr bns) 338.6 405.2 19.7% -0.9%

Source: NBE, Ministry of Transport, Ministry of Revenue, Banks survey data, ECX, JCC, EIC, Ethio Telecom, ELSE, MOTI

Figure 3B: Selected Indicators for Ethiopia's 23 Largest SOEs

Income Indicators in Birr billions

Company Rev Profit Margin Rev Profit Margin Rev Profit 1 Ethiopian Airlines Group 114.0 8.9 7.8% 122.1 … 7.1% …2 Commercial Bank of Ethiopia 53.6 17.9 33.4% 68.7 14.0 20.4% 28.2% -21.8%3 Ethio Telecom 36.0 24.9 69.2% 47.7 28.2 59.0% 32.5% 13.1%4 Eth Shipping & Logistics Enterprise 18.7 2.0 10.6% 25.7 2.6 10.0% 37.4% 29.3%5 All Other SOEs (19 Companies) 35.7 (1.4) … 36.3 10.8 … 1.6% …

Of which: 14 profitable … 2.5 … … … … … Of which: 5 loss-making … (3.9) … … … … …

TOTAL FOR 23 LARGE SOEs: 258.0 52.3 20.3% 300.5 55.6 18.5% 16.5% 6.2%

Source: Public Enterprises Holding and Supervision Agencey (PEHAA) data and press reports.

FY 2019-20FY 2018-19 Growth



14

Activity Indicators… continued:

§ Looking at developments since the start of the new fiscal year, one observes positive trends for the July-September period with respect to tax collections, bank deposits, bank lending, and exports.

§ Tourism arrivals show large declines from year-ago levels, though the picture is more positive when seen sequentially (i.e., the monthly developments since April 2020).

§ Several COVID-hit segments of the

economy are showing somewhat V-shaped recoveries, including for tourist arrivals, industrial park exports, deposit growth, and government revenues.

4B: Monthly Tourist Arrival Numbers (March-September 2020) 4C: Industrial Parks Export($mn)

Source: Tourism Commission Source: EIC

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20

Monthly Tourist Arrival Numbers

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

Dec-1

9Jan

-20Feb

-20Ma

r-20

Apr-2

0Ma

y-20

Jun-20

Jul-20

Aug-2

0Sep

-20

Monthly Industrial Parks Export

4D: Quarterly Deposit Growth Rate(%) 4E: Quarterly Revenue

Source: Banks survey data Source: ERCA

15%

17%

19%

21%

23%

25%

27%

Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20

Quarterly Deposit Growth Rate

40

45

50

55

60

65

70

75

80

2019/20(Q2) 2019/20(Q3) 2019/20(Q4) 2020/21(Q1)

Quarterly Revenue

Figure 4A: Quarterly Activity Indicators

FY 2019-20 First Quarter

FY 2020-21First Quarter

Nominal growth

Real growth

Tax collections (Birr bns) 57.2 74.4 30.1% 9.4%

o/w Direct tax collections 30.7 61.00 98.7% 78.1% o/w Trade tax collections 26.5 13.40 -49.4% -70.1%Bank deposits (Birr bns) 917.6 1,148 25.1% 4.5%

Bank lending (Birr bns) 475.1 623 31.2% 10.6%

Bank profits (private banks), Birr bns 5.0 8.8 76.6% 56.0%

Exports of goods ($mns) 723 830 … 14.8%

Imports of goods ($mns, excl aircraft) 3,731 3,466 … -7.1%

Industrial park exports ($mns) 47 40 … -16.1%

Industrial park employment 76,289 68,460 … -10.3%

Tourist arrivals 223,053 46,540 … -79.1%

Foreign Direct Investment ($bns) 0.7 0.5 … -29%

Capital Goods Imports (USD bns) 1,020 966 -5.3%

Aircraft imports 16 15 -7.3%

Transport-related capital goods 138 107 -22.9%

Capital Goods excl aircraft 1,005 951 -5.3%

Capital Goods excl aircraft/transport 866 845 -2.5%

Source: NBE, Ministry of Revenue, Banks survey data, EIC, MOTI



15

Rainfall and Agriculture

§ Above-average rains were experienced in most parts of the country, which has been positive for this year’s crop prospects.

§ Higher use of fertilizers (whose imports were up 20 percent in FY 2019-20) and a campaign to ‘leave no lands uncultivated’ also suggested good agricultural prospects, and this should still be the case in most parts of the country.

§ However, despite these promising initial

conditions, several rounds of locust invasions have affected farmlands towards the end of rainy season (see below), while conflict-related disruptions to harvest activity—in November and December—appear to be emerging in some areas.

§ Locust infestations have covered a larger

than previously expected farm area, with recent estimates suggesting as much as 700,000 hectares (around 5.5 percent of total farmland) has been impacted. If a high share of the crops on these impacted farms are lost, agriculture growth could be significantly held back, even if the rest of the country’s (non-affected) farms show some modest growth.

§ On the basis of what we now think is likely to be near-zero agriculture growth, we estimate overall GDP growth at 4.1 percent for the current fiscal year, largely driven by construction activity and moderate growth in services.

Figure 5A: Rainfall Levels in 12 Geographic Areas--Data in mm

FY 2018/19 FY 2019/20 Y-o-Y changeAddis Ababa Bole 335.5 306.7 -9%Arba Minch 49.6 98.0 98%Awassa 184.7 118.3 -36%Bahir Dar 351.2 484.4 38%Combolcha 194.6 270.1 39%Deber Zeit (AF) 246.6 ….Debre Markos 323.1 319.2 -1%Dire Dawa 103.1 138.8 35%Gode - 0.1 …..Gonder 206.2 268.3 30%Gore 285.9 247.2 -14%Jimma 267.2 290.3 9%Mekele 135.3 175.8 30%Methehara 103.9 171.0 64%Negele 24.2 36.4 51%Nekemte 351.3 391.9 12%Robe Bale 119.9 129.3 8%

AVERAGE, all areas 189.7 217.2 14%

Source: National Meteorology Agency

Figure 5B: Estimated Impact of Locust Infestation

Locust-related impacts Low End High End

Locust-affected lands, estimated hectares 200,000 700,000 Total farmland under cultivation, 2019-20 12,773,912 12,773,912 Locust-affected farms, percent of all cultivated land 1.57% 5.48%

Locust-affected areas expected output, mns of qtls* 5.2 18.4 Total crop output 2019-20, mn quintals 335.0 335.0

Potential crop decline fall if 100% loss in affected farms -1.6% -5.5%Potential crop decline fall if 50% loss in affected farms -0.8% -2.7%

Source: CSA data for 2019-20 and Cepheus estimates. *Using last year's average yield of 26.2 quintals/hectare.

Figure 5C: Estimates of FY 2019-20 Growth and FY 2020-21 Outlook

FY 2020-21Previous Proj Actual Projection

GDP growth 6.0% 6.1% 4.1%Agriculture 4.3% 4.3% 0.0%Industry 11.0% 9.0% 9.0%Services 4.0% 5.3% 4.0%

Source: NPC and Cepheus Research projections

Last Fiscal Year: 2019-20



16

§ A ‘consensus’ average of growth forecasts

(though mostly pre-conflict) suggests a 3.1 percent outturn for this year, somewhat below our projection of 4 percent.

PRICES AND INFLATION: Recent Developments and Outlook

Inflation outturns: § Overall inflation of 19.3 percent as

of end-October reflects a mix of near 23 percent inflation for domestically produced goods, alongside lower inflation rates of 15 percent for imported items and for services.

§ As before, the main products contributing to inflation include grain cereals (24.3%), vegetables (19.3%), and housing and utility costs (14.6%). These three items each have weights of between 12 to 17 percent in the consumer price index, and thus heavily affect trends in overall inflation.

Figure 6A: Inflation Outturns by key analytical categories -- October 2020

Weight in CPI index

Weights within

Category

Inflation (M-o-M)

Inflation (Y-o-Y)

A. Domestically Produced and Domestically Consumed 23.7%1 Bread and Cereals 17.1% 47% 0.8% 24.3%2 Alcoholic beverages and tobacco 4.9% 13% 2.2% 24.0%3 Other food products 5.6% 15% 0.6% 41.4%4 Meat 4.2% 12% 0.7% 13.4%5 Milk, Cheese, Eggs 3.1% 9% 1.3% 13.4%6 Sugar, jam, honey and others 1.4% 4% 5.2% -1.7%

Sub-Total 36.5% 100%

B. Domestically produced but also heavily exported 23.3%7 Vegetables 12.3% 70% -0.3% 19.3%8 Non- alcoholic beverage and coffee 5.1% 29% 2.6% 34.2%9 Fruits 0.2% 1% 3.1% 0.2%

Sub-Total 17.6% 100.0%

C. Import-Heavy Commodities 13.3%10 Clothing and footwear 5.7% 33% 3.9% 12.3%11 Furnishings, Household Equipment, and others 4.7% 27% 0.1% 5.7%12 Oils and Fats 4.3% 25% 4.3% 22.4%13 Miscellaneous goods 2.5% 15% 0.0% 14.5%

Sub-Total 17.2% 100.0%

D. Services 15.1%14 Housing, water, electricity, gas, other fuels 16.8% 59% -1.8% 14.6%15 Restaurants and Hotels 5.3% 18% 2.9% 15.9%16 Transport 2% 9% -12.4% 22.2%17 Health 1% 5% -0.2% 20.3%18 Communication 2% 7% -0.6% 6.4%19 Recreation and culture 0% 1% 4.6% 5.9%20 Education 0% 1% 4.5% 11.0%

Sub-Total 28.7% 100.0%

Overall inflation 100% … 0.4% 19.3%

Source: CSA and Cepheus Research for categorizations; shaded figures are those items with highest weight in CPI index

Figure 5D: Growth Projections by Different Institutions

FY 2020-21Government 8.5%International Monetary Fund 0.0%World Bank 3.3%African Development Bank 3.1%Economist Intelligence Unit 1.9%NKC Oxford Economics 1.8%Standard & Poors 4.0%Moody's 2.0%Fitch 3.0%

Average 3.1%

Cepheus Capital 4.0%

Source: Press Reports, IMF, WB, Cepheus Research



17

Prices and Inflation… continued:

§ Inflation excluding the three large components noted above remains close to 10 percent as of end-October.

§ Cereal grains, which represent the single highest component in Ethiopia’s inflation index, continue to show large increases for teff (now Birr 4,470 per quintal vs Birr 3,030 a year ago) but moderating price levels for other grains such as maize, wheat, and sorghum.

§ The regional variation in inflation continues to be quite considerable, with inflation rates ranging from a low of 5 percent in the Somali Region to a high of 30 percent in Tigray. The conventionally reported figure, i.e., 19 percent for October 2020, is based on the national average.

Table 6B: Inflation Excluding Certain Large Components

Overall Inflation, End-October 2020 19.3%

Inflation excluding selected items Inflation without cereals price increases 15.2% Inflation without cereals & vegetable price increases 12.8% Inflation without cereals & vegetable & housing/utilities 10.4%

Memo items: Weight Inflation Cereals (including bread) 17.1% 24.3% Vegetables 12.3% 19.3% Housing and Utilities 16.8% 14.6%

Source: CSA and Cepheus Research

FIgure 6C : Price of major grains/cereals (Birr per quintal)

Source: Ethiopian Grain Trading Enterprise

1,146 944

744 905 999 978 990 997 1,010

1,140 1,218 1,234 1,218

3,030 2,990 2,988 2,908 3,022

3,466

3,782 3,886 3,793 4,000

4,113

4,447 4,470

1,884 1,795 1,851 1,726 1,740 1,660 1,695 1,883 1,789 1,885

1,968 2,038 1,930 1,932 1,943 1,803 1,705 1,702 1,698 1,695

1,953

2,498 2,458 2,170

2,395 2,268

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20

Price of major grains/cereals (Birr per quintal)

Maize Teff Wheat Sorghum

FIgure 6D: National and Regional Inflation, October 2020

Source: CSA

5%

14%16%

18% 18%19% 20%

21%

24%

27%28%

30%

0%

5%

10%

15%

20%

25%

30%

35%

Soma

liAf

ar

Dire

Dawa

Amha

ra

Orom

ia

Coun

try

Addis

Aba

baHa

rari

Gamb

ella

SNNP

Bene

shan

gual-

Gum

uzTig

ray

National and Regional Inflation for October 2020



18

Prices and Inflation… continued:

§ The positive news on inflation is that month-on-month price increases have fallen sharply to 0.4 percent in October 2020, which is equivalent to just a 5 percent annualized rate if it were sustained at this rate.

§ Looking ahead, we no longer expect to see negative month-on-month inflation rates for the upcoming harvest months, and thus assume—for both November and December—rates of monthly inflation in line with the recent outturn. Thereafter, we utilize average month-on-month inflation rates based on historical averages.

§ On this basis, inflation rates would remain in the range of 18 to 19 percent till early 2021, but begin falling to the mid-teens by end-March and towards 13 percent by mid-2021.

Figure 6F: Inflation Projections to June 2021

Price index M-o-M inflation Y-o-Y inflation

ActualsJuly 2019 146.3 1.3% 15.5%August 2019 149.8 2.4% 17.9%September 2019 152.3 1.7% 18.6%October 2019 152.1 -0.1% 18.7%November 2019 153.1 0.7% 20.8%December 2019 154.0 0.6% 19.8%January 2020 155.1 0.7% 18.7%February 2020 159.5 2.8% 21.7%March 2020 164.2 3.0% 22.6%April 2020 167.6 2.1% 22.9%May 20220 170.5 1.7% 19.8%June 2020 175.4 2.9% 21.5%July 2020 179.0 2.0% 22.3%August 2020 179.8 0.5% 20.0%September 2020 180.8 0.6% 18.7%October 2020 181.5 0.4% 19.3%

ProjectionsNovember 2020 182.2 0.4% 19.0%December 2020 182.9 0.4% 18.8%January 2021 184.6 0.9% 19.0%February 2021 185.8 0.6% 16.5%March 2021 189.2 1.8% 15.2%April 2021 192.0 1.5% 14.6%May 2021 194.7 1.4% 14.2%June 2021 197.4 1.4% 12.5%

historical mediansSource: CSA and Cepheus Research; M-o-M inflation projections guided by recent trends and

Figure 6E: Month-on-Month Inflation: Trend Lines in Recent Months

Source: CSA

3.0%

2.1%

1.7%

2.9%

2.0%

0.5%0.6%

0.4%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

March April May June July August September October

Month-on-Month Inflation



19

MONETARY POLICY: Recent developments and outlook Monetary growth: § Reserve money growth rose

sharply to near 40 percent as of end-September, though this likely reflects temporary factors related to the currency conversion. Broad money is growing at a more moderate pace of 19 percent on a year-on-year basis.

§ Net central bank credit to government stood at Birr 209bn as of June 2020, and stayed unchanged to end-September, thus showing zero growth for the quarter.

§ Seen over a three-year time

frame, broad money growth has been trending downward, while growth in reserve money has moved in the opposite direction, especially within the past year. The latter partly reflects the liquidity support provided by the central bank to help cushion COVID impacts on the banking sector and real economy.

Bond issuance:

§ Outstanding bond issuance

rose 20 percent last year and now stands at Birr 405bn as of end-June 2020.

§ While most of the outstanding bond issues reflect SOE activity, regional governments have raised their bond issuances last year, up to an outstanding stock of Birr 46bn as of June 2020.

Figure 7B: Year-on-Year Growth Rates of Key Monetary Variables

Source: NBE

30% 30% 30% 29%

25%

22%20% 20%

21% 20%18.6%

17.0%19.2%

25%

18%16%

19%

15%13%

10%

15%

7%

16%

25.3%22.8%

39.9%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20

Y-o-Y Growth Rates of Monetary Variables for the Past Ten Quarters

Broad Money Reserve Money

Figure 7A: Broad Money and Reserve Money (Birr bns)

Jun-17 Jun-18 Jun-19 Sep-19 Jun-20 Sep-20Y-o-Y

% ChangeBroad Money 573.4 740.6 886.8 909.9 1,037.6 1,085.0 19.2%

o/w Domestic credit 631.1 784.6 963.7 999.2 1,176.9 1,237.2 23.8%o/w Net foreign assets 38.0 39.4 14.5 (10.8) (4.7) (28.1) 160.7%

Reserve Money 146.3 174.2 200.7 186.8 246.5 261.4 39.9%o/w Currency in circulation 94.2 112.9 121.8 124.0 140.5 124.4 0.3%o/w Bank deposits at NBE 52.0 61.3 78.9 62.8 106.0 136.9 118.0%

Source: NBE

Figure 9: Outstanding Bonds Issued as of June 2020

Jun-17 Jun-18 Jun-19 Jun-20Y-o-Y

% ChangeTotal Bonds Outstanding (Birr bn) 237.8 291.4 338.6 405.2 20%

Public Enterprises 198.2 245.5 306.8 359.0 17%EEPCO 179.3 216.4 263.9 302.3 15%Railways Corporation 18.9 29.2 42.9 56.7 32%

Regional Government 39.6 45.9 31.8 46.2 45%Addis Ababa City Govt 39 45.3 31.2 45.7 47%Other Regions 0.6 0.6 0.6 0.51 -11%

Source: NBE



20

BANKING: Recent developments and outlook § Deposits rose sharply in recent

months, and were up 8 percent for the quarter and 25 percent year-on-year. This has occurred even before the end of the currency conversion, which is to be completed in December 2020.

§ Bank lending also continues to show strong growth, though much more so at the private banks rather than at CBE.

§ Seen over a longer time frame, deposit growth has shown erratic patterns (lows of 15 percent and highs of 28 percent over the past three years), while lending growth has generally stayed within the range of 25-30 percent on an annual basis.

FISCAL POLICY: Recent developments Revenue performance § Revenue collections in the first

quarter exceeding government targets, and were up 30 percent from year-ago levels.

Figure 10A: Banking Trends (Birr bns)

Jun 2016 Jun 2017 Jun 2018 Jun 2019 Sep 2019 Jun 2020 Sep 2020

Y-o-Y

% Change

Bank deposits 437 568 729 899 918 1,043 1,148 25.1%

CBE 290 366 453 541 538 595 655 21.8%Private Banks 147 202 276 358 380 447 493 29.9%

Bank loans outstanding 232 290 355 456 475 590 623 31.2%

CBE 141 157 177 197 199 243 248 24.4%Private Banks 91 133 179 259 276 347 375 36.2%

Other indicators--all banks

Assets 575 745 914 1,165 1,196 1,379 1,476 23.4%Paid-up capital 24 61 66 74 75 82 83 11.3%Branches 3,145 3,888 4,442 5,164 5,346 5,965 6,124 14.6%

Source: Bank Annual Reports and Bank Survey Data

Figure 10B: Bank Deposit, Loans Levels, and Year-on-Year Growth Rates for the Past Ten Quarters

Source:Bank Annual Survey Data

28%

25%24%

15%

23% 23%

21%

18%

16%

25%

23%

25%

30%

28% 28%

30%30%

32%

29%

31%

10%

15%

20%

25%

30%

35%

-

50

100

150

200

250

300

350

400

450

500

550

600

Jun 2018 Sep 2018 Dec 2018 Mar-19 Jun 2019 Sep 2019 Dec 2019 Mar 2020 Jun 2020 Sep 2020Bank Deposit Growth Bank Loan Growth

Figure 11A: Revenue Performance, Birr bns

FY 2019-20 Quarter 1

FY 2020-21 Quarter 1 % change

Taxes on domestic activity 30.7 61.00 98.7% Direct tax … … … Indirect tax … … …

Trade taxes 26.5 13.40 -49.4% Customs tarrif and tax … … … Non tax revenue … … …

Lottery Sales 0.1 … …

TAX REVENUE TOTAL: 57.3 74.4 29.8%

Source: Ministry of Revenue, Ministry of Finance



21

FISCAL POLICY: Recent developments § While there had been a sharp

drop in tax collections due to COVID in the April-June quarter, this is now no longer the case and revenue collections have recovered strongly.

§ Even after accounting for seasonally high tax payments in the June-September period, collections were up from Birr 52bn in Q1 of last fiscal year to Birr 74bn in Q1 of this fiscal year.

§ Final budget performance data for the 2019-20 fiscal year show a deficit of Birr 89bn, or close to 2.6 percent of GDP.

Public debt, in USD terms: § Outstanding public sector debt

has risen by $1.2bn over the past year and now stands at $54.9 bn; slightly more than half of public debt is now owed to external creditors.

Figure 11B: Quarterly Revenue Performance (Birr bns)

Source: Ministry of Revenue

44

54

47

52

57

70

56

50

74.4

40

45 50

55

60

65 70

75

80

2018

/19(Q

1)

2018

/19(Q

2)

2018

/19(Q

3)

2018

/19(Q

4)

2019

/20(Q

1)

2019

/20(Q

2)

2019

/20(Q

3)

2019

/20(Q

4)

2020

/21(Q

1)

Quarterly Revenue Performance

Figure 13: Public Debt, USD bns

Jun-17 Jun-18 Jun-19 Jun-20 % of Total Total Public Debt 45.8$ 49.5$ 53.7$ 54.9$ 100.0%

External debt 23.3$ 25.9$ 27.0$ 28.7$ 52.2%Central Government 13.0$ 14.7$ 16.0$ 17.8$ 32.4%State Owned Enterprises 10.4$ 11.2$ 11.1$ 10.9$ 19.8%

Domestic Debt 22.4$ 23.6$ 26.7$ 26.2$ 47.8%Central Government 10.3$ 11.0$ 12.5$ 12.4$ 22.5%State Owned Enterprises 12.1$ 12.6$ 14.2$ 13.9$ 25.2%

Source: MoFEC Public Debt Bulletin

Figure 12: Budget Performance, Birr bns

FY 2018-19 FY 2019-20 Percent change

Total revenue and grants 236.0 276.1 17.0%Total Revenue 218.3 253.3 16.0%Grants 17.6 22.8 29.2%

Total Expenditure 308.5 364.7 18.2%Current Expenditure 85.6 100.7 17.6%Capital Expenditure 85.7 112.0 30.8%Regional Transfers 137.2 151.9 10.7%

Deficit, Birr bns (72.5) (88.5) 22.1%Deficit, Percent of GDP -2.7% -2.6% …GDP (Birr bns) 2,696 3,375 25.2%

Source: NBE Quarterly Bulletin



22

Public debt, relative to GDP: § Relative to GDP, public debt is

down to 51 percent as of end-June 2020, a notable drop from the 59 percent two years ago.

External debt stocks § External debt rose by $1.7bn

during the year, and now stands at $28.7bn. Despite the nominal increase, external debt fell slightly (to 27%) relative to GDP.

§ Only 62 percent of external debt is owed by the Government, with the remainder owed by state enterprises.

Figure 14: Public Debt, % GDPJune 2017 June 2018 June 2019 June 2020

Total Public Debt 56.1% 59.0% 56.0% 51.1%

External debt 28.6% 30.9% 28.2% 26.7%Central Government 15.9% 17.5% 16.6% 16.6%State Owned Enterprises 12.7% 13.4% 11.6% 10.1%

Domestic Debt 27.5% 28.1% 27.8% 24.4%Central Government 12.7% 13.1% 13.1% 11.5%State Owned Enterprises 14.9% 15.0% 14.8% 12.9%

Memo items: GDP, Birr bns 1,833 2,200 2,696 3,375 Exchange rate, year avg 22.5 26.2 28.1 31.4 GDP, USD bns 81.6 83.9 95.9 107.4


Figure 15: External Debt (Public Sector), In USD bns

June 2017 June 2018 June 2019 June 2020 % of TotalTotal External Debt of Public Sector, USD bns 23.3$ 25.9$ 27.0$ 28.7$ 100.0%

Government 13.0$ 14.7$ 16.0$ 17.8$ 62.1%

EAL & Ethio-telecom 6.9$ 7.6$ 7.3$ 7.2$ 25.3%

Other State Enterprises 3.4$ 3.6$ 3.8$ 3.6$ 12.6%

Total External Debt of Public Sector, % GDP 28.6% 30.9% 28.4% 26.7% …Government 15.9% 17.6% 16.7% 16.6% …

EAL & Ethio-telecom 8.5% 9.1% 7.6% 6.7% …

Other State Enterprises 4.2% 4.3% 4.0% 3.4% …

GDP, USD bns 81.6$ 83.9$ 95.9$ 107.4$ …




23

BALANCE OF PAYMENTS (BOP): Recent developments § Full BOP data for last year show an

overall deficit of around $700mn (when taking into account changes in banking system net foreign assets). The loss in fx reserves during the 2019-20 fiscal year was, however, only about $200mn.

§ On the positive side, FY 2019-20 showed a much lower trade deficit, an improved services account, and a lower current account deficit. The drop in service receipts (from lower tourism) was offset by an even larger drop in service imports, allowing an overall improvement in the net services balance.

§ Negative trends were registered in

remittances, grants, and FDI—all three of which were down between 17-30 percent.

FX reserves: § Fx reserves data (available to

September 2020) show central bank reserves at $3.3bn, up somewhat from the $3.2bn at end-June and notably higher than the $2.6bn than the year-ago levels.

Figure 16: Balance of Payment--recent outturns, latest available data

Balance of Payments in USD mns FY 2018-19 FY 2019-20 Percent change

Exports 2,667 2,988 12%Imports 15,112 13,881 -8%Trade Balance (12,445) (10,894) -12%

Services, net (551) (188) -66%Non-factor services, net 39 419 976%

Exports of non-factor services 4,949 4,664 -6%Imports of non-factor services 4,910 4,245 -14%

Income, net (590) (607) 3% O/w Gross official int. payment 669 649 -3% Dividend - -

Private transfers, net 6,375 5,625 -12%Remittances 5,693 4,722 -17%

Current account balance excluding grants (6,621) (5,456) -18%Official transfers, net 2,087 1,488 -29%

Current account balance including grants (4,534) (3,969) -12%

Capital account 4,840 4,147 -14%Official Long-term Capital, net 1,341 1,947 45%

Disbursements 1,529 2,148 40%Amortization 188 200 7%

Other public long-term capital 74 (234) -418%Private sector, long term 264 164 -38%Foreign Direct Investment, net 3,015 2,419 -20%Short term Capital 146 (149) -202%

Errors and omissions (1,247) (909) -27%

Overall balance (942) (730) -22%

Financing 942 730 -22%

Reserves [ Increase(-), Decrease (+)] 942 730 -22% Central Bank (NFA) 917 667 -27%

Asset (568) 305 -154% Liabilities 1,484 362 -76%

Commercial Banks (NFA) 25 63 153%

Source: NBE Quarterly Bulletin

Figure 17: FX Reserve:, NBE and Commercial Banks (USD mns)

Source: NBE

$1,118 $1,011 $944 $987 $887 $754 $750

$1,005 $904

$3,745 $3,958 $3,920

$3,415

$2,597

$2,965

$2,450

$3,209 $3,277

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

2018-19(Q1) 2018-19(Q2) 2018-19(Q3) 2018-19(Q4) 2019-20(Q1) 2019-20(Q2) 2019-20(Q3) 2019-20(Q4) 2020-21(Q1)

FX Reserve:, NBE and Commercial Banks (USD mns)

Banks NBE



24

TRADE PERFORMANCE: Recent developments Export performance: § Gold exceeded coffee exports this

past quarter, though this may not last as seasonal coffee exports pick up over the coming months.

§ As before, besides gold, the other top exports were agricultural products—including flowers, chat, oilseeds and pulses.

§ Electricity exports were near

$25mn for the quarter and appear on track to reach $100mn in year-total exports.

§ Manufacturing exports performed

poorly during the quarter, with declines seen in textiles, leather, meat, electronics, and construction inputs.

§ In terms of growth rates, besides

gold, the other fastest growing export categories were in electricity and oilseeds.

§ Non-gold exports showed negative growth overall (-12 percent), which shows underlying weaknesses outside of the few large product categories.

Figure 18A: Export Performance FY 2020-21 First Quarter

Ranked by USD levels this yearFY 2019-20

Quarter 1FY 2020-21

Quarter 1Percent Change

Total Exports 722.8 834.7 15.5%

Gold 6.1 203.30 3208%Coffee 232.1 185.34 -20%Flower 115.4 102.46 -11%Chat 92.5 94.69 2%Oil Seeds 53.9 58.02 8%Pulses 48.7 46.71 -4%Textile & Textile Products 51.8 41.45 -20%Elecricity 10.0 23.27 132%Meat & Meat Products 18.5 15.97 -14%Others 11.4 13.41 18%Fruits & Vegetables 16.4 13.23 -19%Live Animals 24.2 12.40 -49%Leather and Leather Products 23.6 9.28 -61%Electronics 8.1 7.69 -5%Spices 4.3 3.24 -25%Cereals and flour 0.7 2.40 260%Natural Gum 2.2 0.79 -65%Chemicals & Construction Inputs 2.3 0.69 -70%Bees Wax 0.5 0.38 -30%

Source: MOTI, ERCA

Figure 18B: Export Performance--Ranked by Growth Rate

Ranked by growth rate:FY 2019-20

Quarter 1

FY 2020-21

Quarter 1

Percent

change

Total Exports, USD mns 723 835 15.5%

Gold 6.1 203.30 3208%Cereals and flour 0.7 2.40 260%Elecricity 10.0 23.27 132%Others 11.4 13.41 18%Oil Seeds 53.9 58.02 8%Chat 92.5 94.69 2%Pulses 48.7 46.71 -4%Electronics 8.1 7.69 -5%Flower 115.4 102.46 -11%Meat & Meat Products 18.5 15.97 -14%Fruits & Vegetables 16.4 13.23 -19%Textile & Textile Products 51.8 41.45 -20%Coffee 232.1 185.34 -20%Spices 4.3 3.24 -25%Bees Wax 0.5 0.38 -30%Live Animals 24.2 12.40 -49%Leather and Leather Products 23.6 9.28 -61%Natural Gum 2.2 0.79 -65%Chemicals & Construction Inputs 2.3 0.69 -70%

Source: MOTI, ERCA



25

Trade performance… continued: § Coffee exports are seasonally

low at this time of year, but nonetheless show a slight decline from year-ago levels.

§ Trends in gold exports show

rising NBE purchase prices helping bring about big jumps in monthly export values.

§ Due to COVID-related cutbacks

in foreign orders, industrial park exports fell by half between February and April 2020, but have since been showing a gradual recovery.

Figure 18E: Industrial Parks Exports: Quarterly Trends since 2018

Source: EIC

15 15 15 16 16

14 13

7

10 10

15 14

11

-

2

4

6

8

10

12

14

16

18

Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20

Industrial Parks Exports ($mns)

Figure 18C: Coffee Exports--Monthly Trends Since Year Ago ($mns)

Source: MOTI

52 47

34 43

57

97

104

97.95 91.1

64.172.9

48.3 45.9

-

20

40

60

80

100

120

Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20

Coffee Exports--Month Trends Since Year Ago

Figure 18D; Monthly Gold Export Value and Purchasing Price

Source: MOTI, NBE

2.7 0.8 0.7 1.6

5.1 3.2 0.9

9.4

63.3

54.7 51.5

71.5 71.5

60.3 61.9

1,110

1,210

1,310

1,410

1,510

1,610

1,710

1,810

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

Aug-1

9

Sep-1

9

Oct-1

9

Nov-1

9

Dec-1

9

Jan-20

Feb-2

0

Mar-

20

Apr-2

0

May

-20

Jun-2

0Ju

l-20

Aug-2

0

Sep-2

0

Oct-2

0

Montly Gold Export Value and Purchasing Price

Value(USD mns) End month Gold purchasing price



26

Trade performance… continued: Import performance: § Imports continue to show

declines over the past quarter, even excluding certain categories such as fuel and aircraft.

§ Lower global oil prices continue to allow for a substantial lower fuel import bill, which is down 36 percent from year-ago levels.

§ Consumer goods, particularly in

the ‘other foods’ category, are among the few import items showing large year-on-year growth rates.

§ Capital goods imports are also

falling across all sub-categories, suggesting reduced investment ratios for the broader economy unless this is reversed in the coming quarters.

Figure 19A: Import Performance


FY 2020-21Quarter 1 % Change

Total Imports 3,746 3,480 -7.1%

Raw Materials 42.8 34.9 -18%Semi-finished Goods 707 572.5 -19%

Chemicals 201.9 133.1 -34%Fertilizers 22.6 9.6 -58%Textile Materials 28.1 29.6 6%Others 454.8 400.2 -12%

Fuel 594 377.9 -36%Petroleum Products* 574 358.3 -38%Others 20 20 1%

Capital Goods 1,020.3 966.1 -5% Transport 138.2 106.6 -23%

Aircraft 15.8 14.7 -7% Agricultural 16.6 20.8 25% Industrial 865.5 838.7 -3%

Consumer Goods 1,149.6 1,491.5 30% Durables 281.6 207.4 -26%

o/w Car and Other Vehicles 66.5 4.7 -93% Non-durables 868.1 1,284.2 48%

Cereals 287.2 195.7 -32%Other Food 149.3 374.6 151%Medical & Pharmaceuticals 149.9 110.4 -26%Textile Fabrics 109.1 126.9 16%Others 172.5 476.6 176%Miscellaneous 232.5 37.3 -84%

Non-fuel, non-aircraft imports 3,136.84 3,087.75 -2%

Source: MOTI, ERCA

Figure 19B: Capital Goods Imports by sub-components


FY 2020-21Quarter 1

Percent change

Capital Goods Imports 1,020 966 -5.3%

Of which:Transport capital goods 138 107 -23%

Aircraft imports 16 15 -7%Non-aircraft transport imports 122 92 -25%

Industrial capital goods 865 839 -3%Agricultural capital goods 17 21 25%

Capital Goods excl transport 882 859 -3%

Source: MOTI, ERCA



27

ETHIOPIA’S SOVEREIGN BOND: Recent developments and outlook Sovereign Bond Yields: § The yields on Ethiopia’s sole

internationally traded sovereign bond (maturing in 2024) had shown a steady drop in the June to September period, but subsequently rose sharply since the start of conflict in early November.

Sovereign Bond Prices: § Prices on the bond have now fallen

below par as of November, implying several percentage points of losses for bondholders.

Spreads vs US Treasuries: § The bond’s spread vs US 10-year

Treasuries remains above 600 basis points, but has not risen as much as yields given the uptick in 10-year treasury yields.

Figure 20: Ethiopia's Soveregn Bond--Yield to Maturity

Source: FactSet

5.50

4.85 4.75

5.28

9.38

10.06

8.55

6.75 6.876.37 6.52 6.48

7.35

4.50

5.50

6.50

7.50

8.50

9.50

10.50

Nov-1

9De

c-19

Jan-20

Feb-2

0

Mar-2

0Ap

r-20

May-2

0Jun

-20Jul

-20Au

g-20

Sep-2

0Oc

t-20

Nov-2

0

Ethiopia's Sovereign Bond--Yield to Maturity

Figure 21: Ethiopia's Sovereign Bond--End Month Prices

Source: FactSet

104.9

107.7 108.0 105.6

89.7 87.5

92.9

99.5 99.0 100.9 100.4 100.5

97.5

87.0

92.0

97.0

102.0

107.0

112.0

Nov-1

9De

c-19

Jan-20

Feb-2

0

Mar-2

0Ap

r-20

May-2

0Jun

-20Jul

-20Au

g-20

Sep-2

0Oc

t-20

Nov-2

0

Ethiopia's Sovereign Bond--End Month Prices

Figure 22: Ethiopia's Sovereign Bond--Spread vs US Treasuries

Source: FactSet

387.9

317.3 343.4

435.8

896.0

971.2

825.0

645.4 666.5 608.9 624.0 625.5 616.87

310.0

410.0

510.0

610.0

710.0

810.0

910.0

1,010.0

Nov-1

9De

c-19

Jan-20

Feb-2

0

Mar-2

0Ap

r-20

May-2

0Jun

-20Jul

-20Au

g-20

Sep-2

0Oc

t-20

Nov-2

0

Ethiopia's Sovereign Bond--Spread vs US Treasuries



28

EXCHANGE RATE: Recent developments and outlook § Exchange rate movements over

the past five months have averaged 62 cents per month, and crossed 38 Birr per USD in early November 2020.

§ After a continuous rise since July

2019, the annual rate of depreciation peaked at 28 percent in October 2020, but has since begun to show a slightly slower pace of change—of 24 percent—as of November 2020.

Figure 23A: Trends in Exchange Rate: Last 12 Months

Source: CBE website

29.03 29.15 29.28 29.43 30.62

31.80 32.06 32.28 32.81 33.53

34.16 34.93 35.27

36.16 36.75 37.55 38.05

20.00

22.00

24.00

26.00

28.00

30.00

32.00

34.00

36.00

38.00

40.00

Jul-19

Aug-1

9Se

p-19

Oct-1

9

Nov-1

9De

c-19

Jan-20

Feb-2

0

Mar-2

0Ap

r-20

May-2

0Jun

-20Jul

-20Au

g-20

Sep-2

0Oc

t-20

Nov-2

0

Trends in Exchange Rate: Last 12 Months

Figure 23B: Birr Depreciation Rate from year-ago levels (%)

Source: CBE, Cepheus Research

6.1% 6.1% 6.1% 6.1%

9.8%

13.4%13.7%13.9%15.2%

17.1%18.7%

20.8%21.5%

24.0%25.5%

27.6%

24.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Jul-19

Aug-19

Sep-19Oct-19

Nov-19Dec-19Jan-20

Feb-20

Mar-20Apr-20

May-20Jun-20

Jul-20

Aug-20

Sep-20Oct-20

Nov-20

Depreciation Rate from Year-Ago Levels



29

Exchange rate developments and outlook: § The gap between official and

parallel market rates remains around 25 percent in recent quarters.

§ With moderating inflation and

significant USD depreciation versus other global currencies in recent months (both of which lessen the need for Birr depreciation), we expect 50 to 60 cents of monthly Birr adjustments—on average—for the period ahead. This translates into year-on-year depreciation rates of around 20 percent, sufficient to fully cover anticipated rates of inflation. Accordingly, we see the exchange rate at close to 39 Birr/USD by end-December 2020 and just under 42 Birr/USD by June 2021.

Figure 24: Exchange Rate: Forecasts to June 2021

Actuals: End Month

Buying Rate:

Birr/USD

Monthly Change:

In Birr

Depreciation from

year agoOctober 2019 29.43 0.16 6.1%

quarterly macroeconomic review third quarter 2020 · 2020. 12. 8. · quarterly macroeconomic...

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