Political sketch
Formerly Abyssinia. Always independent except during the Italian occupation of 1935-1941.
Ethiopia, with Liberia, was the only part of Africa the Western European powers did not apportion among themselves in the Treaty of Berlin (signed on 26 February 1885), resulting from the Berlin West Africa Conference. The 1700s had begun 150 years of war among various princes, ending in the ascension of the emperor Menilek in 1889. In the mid and late 1800s Ethiopian armies battled the British, Egyptians (operating from Sudan, which was then under Egyptian rule ), and Italians. In general, Ethiopia succeeded in protecting its informally established frontiers and getting them formally recognized. However, Italy interpreted an 1889 treaty as giving it a protectorate over Eritrea, where Ethiopia, Egypt, and Italy vied for control. Ethiopia did not support that interpretation. The Italian protectorate left Ethiopia landlocked. In 1896 the Ethiopian army repulsed an Italian attempt at conquest. Exports of coffee produced relative prosperity in the 1920s. During the dictatorship of Benito Mussolini in Italy, Italian armies from the neighboring territories of Eritrea and Italian Somaliland (today southern Somalia) conquered Ethiopia in May 1935 and made it part of Italian East Africa. During the Second World War, British troops from Kenya and Sudan defeated the Italian army in April and May 1941. The United Kingdom maneuvered to bring part or all of Ethiopia within Britain's colonial sphere, but the Ethiopian emperor Haile Selassie successfully resisted the pressure. On 15 September 1952 Eritrea joined a federation with Ethiopia. On 14 November 1962 Haile Selassie dissolved the federation, contrary to the wishes of most Eritreans, and a long guerilla war with Eritrean separatists began in earnest. On 12 January 1974 a military mutiny began. On 12 September 1974 military officers seized Haile Selassie and replaced the monarchy with a brutal Marxist dictatorship. The dictatorship fought against separatist movements in Eritrea and other provinces, and engaged in a border war with Somalia. The government's adoption of central planning of the economy combined with droughts to create famines that resulted in many deaths. A coalition of opposition guerilla groups brought down the dictatorship in early 1991. The transitional government recognized Eritrea's declaration of independence of 24 May 1993. In 1995 a new federal constitution was proclaimed and multiparty elections were held in May. From 1998 to 2000, Ethiopia fought a costly war with Eritrea over minor unresolved problems of demarcating the border.
Wars since 1500
British Expedition in Abyssinia (Ethiopia), 1867-1868; Abyssinian (Ethiopian) Civil War of 1868-1872; Abyssinian (Ethiopian)-Egyptian War of 1875-1877; Italo-Ethiopian (Abyssinian) War of 1887-1889; Italo-Ethiopian (Abyssinian) War of 1895-1896; Holy Wars of the "Mad Mullah," 1899-1920 (Somali tribes against United Kingdom, Italy, Ethiopia); Italo-Ethiopian (Abyssinian) War of 1935-1936; Second World War in East Africa, 1940-1941 (Italy against United Kingdom); Ethiopian-Eritrean Guerilla War, 1961-1991; Ethiopian-Somali Border War, 1963-1988; Ethiopian-Eritrean Border War, 1998-2000.
Convertibility
For some years before the Second World War the Ethiopian government troed to influence the exchange rate by prohibiting the import or export of coins, mainly silver Maria Theresa thalers. At the time, coins were the main medium of exchange both by volume and by value of transactions. In 1916, during the First World War, the government prohibited the export of coins at a time when the currency was "overvalued." In 1919 the government prohibited imports of thalers to combat a "glut" of silver coins. The prohibition lasted until February 1934. The government imposed bans on the export of coins in 1923, December 1930, May 1933, and April 1935. The frequent repetitions of bans is evidence that they "were by not means fully effective" (Pankhurst 1968: 487). Ethiopia introduced exchange controls on 31 October 1942 (Ethiopia, Currency Proclamation, No. 31, 31 October 1942, cited in Degefe 1995: 268).
Other
Defaults on or restructurings of debt to the private sector (mainly from Purcell and Kaufman 1993 and Standard & Poor's 2004): None.
Banking crises (data since 1970s mainly from Caprio and Klingebiel 1999 and Frydl 1999): Moderate problems at a government-owned bank 1994-1995.
Frankel and Rose (1996) list of currency crashes: 1992.
No exchange rate data in Reinhart and Rogoff (2003).
References
Primary sources:
--Laws and decrees:
Ethiopia. Gazette. 1942-present. Negarit gazeta; English title Negarit Gazeta of the Empire of Ethiopia (1942-1974); Negarit Gazeta of the People's Democratic Republic of Ethiopia (1974-1991); Negarit Gazeta of the Transitional Government of Ethiopia (1991-1994); Federal Negarit Gazeta of the Federal Democratic Republic of Ethiopia (1994-present). Addis Ababa: Berhanena Selam Printing Press (1942-1994); Printing Press (1994-present).
Italy. Gazette. 1860-present. Gazzetta ufficiale del Regno (1860-1861); Gazetta ufficiale del Regno d'Italia (1861-1946); Gazzetta ufficiale della Repubblica italiana (1946-present). Turin and Florence (1860-1923); Rome (1923-present): Tip. Favale (1860-1923?); Provvidetitorato Generale dello Stato, Ministero delle Finanze (1923-1928); Istituto Poligrafico dello Statio (1928-1978); Istituto Poligrafico e Zecca dello Stato (1978-present). Online at <http://www.gazzettaufficiale.it>.
--Publications of monetary authorities:
Banca d'Italia. Annual report. 1895-present. Adunanza generale ordinaria e straordinaria degli azionisti ... (1895-1935); Adunanza generale ordinaria dei partecipanti ... (1936-1950); Assemblea generale ordinaria dei partecipanti ... (1951-present). Rome: Tipografia della Banca d'Italia (1895-1950); Banca d'Italia, Centro Stampa (1951-present). An abridged English version is available from at least 1933 (Abridged Translation of the Report of the Governor at the Annual General Meeting of the Shareholders Held in Rome on the ... [1933-1939]; no English version 1940-1951; Abridged Version of the Report for the Year ... Presented at the Ordinary General Meeting of Shareholders Held in Rome on ... [1952-1964]; Abridged Version of the Report for the Year ... Presented by the Governor at the Ordinary General Meeting of Shareholders Held in Rome on ... [1965-1983]; Ordinary General Meeting of Shareholders Held in Rome on ...; Abridged Report for the Year ... [1984-present]).
Bank of Abyssinia. Annual report. 1906-1931. Annual Report. Cairo? (This is cited in Mauri 2003a with scant information. Mauri quotes snatches of text from the annual report in French, so the title may have also been in French.)
Bank of Ethiopia. Annual report. 1931-1935. Annual Report. Addis Ababa: Bank of Ethiopia. (This is cited in Mauri 2003a with scant information, and I am not even sure what language it was printed in.)
East African Currency Board. Annual report. 1920/1921-1971/1972. Report of the East African Currency Board for the Year ending 30th June... (1920/1921-1959); Report for the Year Ended 30th June ... (1961/1962-1970/1971); The Final Report of the East African Currency Board (1971/1972). London: Waterlow and Sons (1920/1921-1958/1959); Nairobi: Government Printer, Kenya (1959/1960-1964/1965), Printing and Packaging Corporation (1965/1966-1970/1971); East African Currency Board (1971/1972).
Ya'Ityopy Behérwi Bnk (National Bank of Ethiopia). Annual report. 1964-present. First [etc.] Annual Report (1964-1976); Annual Report (1977-1990/1991); Report and Account (1991/1992-2000/2001); Annual Report (2001/2002-present). Addis Ababa: National Bank of Ethiopia.
Ya'Ityopy Behérwi Bnk (National Bank of Ethiopia). Bulletin. 1964-present. Quarterly Bulletin. Addis Ababa: National Bank of Ethiopia.
Ya'Ityopy Mangest Bnk (State Bank of Ethiopia). Annual report. 1946-1963. Annual Report. Addis Ababa: State Bank of Ethiopia.
Ya'Ityopy Mangest Bnk (State Bank of Ethiopia). Bulletin. 1948-1963. Monthly Letter (1948-1950); Monthly Report on Economic Conditions and Market Trends (1950-1963). Addis Ababa: State Bank of Ethiopia.
--Web site of the current monetary authority (viewed 20 September 2005):
<http://www.nbe.gov.et>
--Other publications or Web sites:
None.
Main secondary sources:
Banca d'Italia. 1940. La Banca d'Italia nelle terre d'oltremare. Rome: Istituto Poligrafico dello Stato.
Barclays Bank (Dominion, Colonial and Overseas). 1948. A Bank in Battledress: Being the Story of Barclays Bank (Dominion, Colonial and Overseas) During the Second World War, 1939-1945. Cape Town: printed by Cape Times, Limited for private circulation. (Contains some information on the role of the bank as agent for British forces in the Horn of Africa during the Second World War.)
Belai, Giday. 1987. Currency and Banking, Ethiopia. Addis Ababa: Belai Giday.
Degefe, Befekadu. 1995. "The Development of Money, Monetary Institutions and Monetery Policy 1941-75." In Shiferaw Bekele, editor, An Economic History of Modern Ethiopia: Vol. 1, The Imperial Era, 1941-74. [Dakar,] Senegal: Codesria.
De Rosa, Luigi, and Gabriele de Rosa. 1982-1984. Storia del Banco di Roma, 3 v. Rome: Banco di Roma. (The Banco di Roma operated in Italian colonies).
Gill, Denis. 1991. The Coinage of Ethiopia, Eritrea and Italian Somalia. Garden City, New York: Dennis Gill.
IMF ARER. 1950-present. International Monetary Fund. Annual Report on Exchange Restrictions (1950-1978), Annual Report on Exchange Arrangements and Exchange Restrictions (1979-1988), Exchange Arrangements and Exchange Restrictions: Annual Report (1989-present). Washington: International Monetary Fund. (Contains information on IMF member countries and some of their dependencies.)
Mauri, Arnaldo. 2003a. "Origins and Early Development of Banking in Ethiopia." Dipartimiento di Economia Politica e Aziendale, Università degli Studi di Milano, Working Paper No. 04.2003, October, <www.economia.unimi.it/pubb/wp28.pdf>, viewed 24 September 2005.
Mauri, Arnaldo, and Clara Caselli. 1986. Moneta e banca in Etiopia. Milan: Finafrica-Cassa di Risparmio delle Provincie Lombarde, Giuffrè Editore.
National Bank of Egypt. 1948. National Bank of Egypt, 1898-1948. Cairo: N.B.E. Printing Press. (Scraps of information.)
Pankhurst, Richart. 1968. Economic History of Ethiopia 1800-1935. Addis Ababa: Haile Selassie I University Press. (Eritrea was part of Ethiopia for part of the period the book covers.)
Pick's Currency Yearbook. 1955-1977/79. New York: Pick Publishing. Succeeded by Pick's World Currency Report and later World Currency Yearbook.
Rodd, [Baron] F[rancis] J[ames] Rennell [Lord Rennell of Rodd]. 1948. British Military Administration of Occupied Territories in Africa During the Years 1941-47. London: His Majesty's Stationery Office. (Concerns in particular Eritrea, Ethiopia, Libya, and Somalia.)
Talbot, David Abner, editor. 1966.Ethiopia: Liberation Silver Jubilee, 1941-1966. Addis Ababa: Publications and Foreign Languages Press Department, Ministry of Information.
Tschoegl, Adrian. 2001. Maria Theresa's Thaler: A Case of International Money." Eastern Economic Journal, v. 27, no. 4, Fall: 443-62.
Tuccimei, Ercole. 1999. La Banca d'Italia in Africa: introduzione all'attività dell'Istituto di emissione delle colonie dall'età crispina alla seconda guerra mondiale. Rome: Laterza. (Concerns Italian colonies.) (I have not seen this.)
Monetary authorities: Ethiopia
| Dates | Type | Name | Source | Remarks |
| 15 February 1906
-9 November 1931 |
private monopoly issue | Bank of Abyssinia (headquarters Cairo, Egypt and Addis Ababa, Ethiopia) | Ethiopia, concession granted by the emperor, 10 March 1905; Egypt, decree of 30 May 1905 incorporating the Bank of Abyssinia there; both cited in Pankhurst (1968: 495-6) | Silver Maria Theresa thaler coins were widely used from about 1800. The Bank of Abyssinia, managed and partly owned by National Bank of Egypt and incorporated in Egypt, opened its first offices in Addis Ababa and Harar on 15 February 1906 (Pankhurst 1968: 497). It was the first bank in Ethiopia. It issued its first notes in 1914-1915 (Pankhurst 1968: 491; Mauri 2003a: 10 n. 15 says 1916). The bank had to hold a reserve of silver coins at least equal to its notes in circulation, thought it had no reserve requirement against deposits (Mauri 2003a: 13). The second bank was the Société Nationale d'Éthiopie pour le Développement de l'Agriculture et du Commerce (headquarters Addis Ababa, Ethiopia), in Addis Ababa, founded on 10 May 1908 (Pankhurst 1968: 498). Coins had been minted in Ethiopia periodically since the 100s BC; the first modern coins were issued in 1894 under the emperor Menilek. |
| 10 November 1931
-July 1936 |
central bank (with minority private ownership and commercial banking functions) | Bank of Ethiopia (headquarters Addis Ababa, Ethiopia) | Ethiopia, decree of 29 August 1931, cited in Pankhurst (1968: 498) | The recently crowned emperor, Haile Selassie, liquidated the Bank of Abyssinia despite the 50-year concession granted by a predecssor, and replaced the bank with a purely Ethiopian institution. Lack of interest among foreign investors left the government holding more than 95% of the stock (Mauri 2003a: 21). The bank took over the operations of the Bank of Abyssinia and operated with the same staff initially. After Addis Ababa fell to the Italians on 5 May 1936, the Italian occupation authorities allowed the Bank of Ethiopia to continue its operations for a short time while they decided what policy to follow for the longer term (Mauri 2003a: 26). |
| July 1936
-about 29 April 1941 |
dollarization (as occupation currency) | Italian lira (issued by central bank Banca d'Italia [headquarters Rome, Italy]) | Italy, decree of 2 July 1936, cited in Gill (1991: 57) | The Italian occupation government introduced the Italian lira following Italy's conquest of Ethiopia. The Banca d'Italia made special issues of lira notes for Italy's East African colonies dated from 14 June 1938-14 January 1939 (Italy, act of 8 August 1938). |
| about 30 April 1941
-14 April 1943 |
dollarization | East African shilling (issued by joint currency board East African Currency Board [headquarters London, England]) | United Kingdom, Occupied Enemy Territory Administration, Notice No. 3, April 1941, reprinted n Barclays Bank (Dominion, Colonial and Overseas) (1948: 63-4) | Following the Allied capture of Ethiopia from Italy during the Second World War, the British administration introduced the East African shilling, used in British East African colonies. Silver Maria Theresa thalers and Egyptian government currency, and were also legal tender. Indian rupees were likewise legal tender (United Kingdom, Occupied Enemy Territory Administration, notice of 4 April 1941, cited in Gill 1991: 64). Indian rupees ceased to be legal tender in Eritrea on 1 May 1942 (Gill 1991: 64); it is unclear when they ceased to be legal tender in Ethiopia, but I assume it was around the same time. Barclays Bank (Dominion, Colonial, and Overseas) opened a branch in Addis Ababa on 1 July 1941, and acted as the agent for the British forces on currency matters (Barclays Bank [Dominion, Colonial and Overseas] 1948: 393). |
| 15 April 1943
-14 July 1945 |
central bank (with commercial banking functions) allongside dollarization | Ya'Ityopy Mangest Bnk (State Bank of Ethiopia) (headquarters Addis Ababa, Ethiopia) alongside East African shilling (issued by joint currency board East African Currency Board [headquarters London, England]) | Ethiopia, proclamation of 26 August 1942, cited in Gill (1991: 65) | Re-established a central bank (this time with no private ownership) as a sign of renewed independence. The central bank began banking operations at the start of this period, but issued no notes. The central bank was established with help from the United States, and the first governor was an American, George Blowers. |
| 15 July 1945
-31 December 1963 |
central bank (with commercial banking functions) | Ya'Ityopy Mangest Bnk (State Bank of Ethiopia) (headquarters Addis Ababa, Ethiopia) | National Bank of Ethiopia Web site, viewed 30 September 2005 | The central bank began to issue notes, and the East African Currency Board ceased doing so in Ethiopia. Ethiopia joined the IMF on 27 December 1945 as an original member. The central bank expanded operations to Eritrea when Eritrea federated with Ethiopia 15 September 1952. |
| 1 January 1964
-September 1976 |
central bank | Ya'Ityopy Behérwi Bnk (National Bank of Ethiopia) (headquarters Addis Ababa, Ethiopia) | Ethiopia, Proclamation to Provide for the Regulation of the Monetary and Banking System, No. 206, 27 July 1963; Charter of the National Bank of Ethiopia, Order No. 30, 27 July 1963; both translated in National Bank of Ethiopia annual report 1964: 16-26 | The State Bank of Ethiopia split into two parts: a new central bank and the Commercial Bank of Ethiopia (headquarters Addis Ababa, Ethiopia). The central bank assumed responsibility for issuing coins, which had formerly been handled by the Ethiopian Treasury. After a revolution that deposed the king and established a Marxist government, Ethiopia nationalized private banks and insurance companies on 1 January 1975. |
| September 1976
-31 March? 1994 |
monobank | Ya'Ityopy Behérwi Bnk (National Bank of Ethiopia) (headquarters Addis Ababa, Ethiopia) | Ethiopia, Proclamation No. 99, September 1976, cited in National Bank of Ethiopia annual report 1976: 5 | Gave the central bank greater powers of control over the financial system, converting the financial system into a monobank. |
| 1? April 1994
-present (2005) |
central bank | Ya'Ityopy Behérwi Bnk (National Bank of Ethiopia) (headquarters Addis Ababa, Ethiopia) | Ethiopia, Monetary and Banking Proclamation, No. 93/1994, January 1994; Licensing and Supervision of Banking Business Proclamation, No. 84/1994, January 1994; both cited in National Bank of Ethiopia annual report 1993/1994: 10 | Returned to a two-tier banking system and allowed private commercial banks to operate. |
Exchange rate arrangements: Ethiopia
| Dates | Official arrangement | Source | Unofficial arrangement, if different | Remarks |
| about 1800
-1894 |
fixed; used silver Maria Theresa thaler | none; customary usage; see Gill (1991: 80) [rechck; perhaps cite Pankhurst 1968 instead] | The silver Maria Theresa thaler became the most widely used coin. | |
| 1894
-14 February 1906 |
fixed; 1 Ethiopian talari = 1 Maria Theresa thaler = 23.44g silver | Ethiopia, decree of 10 February 1893, cited in Gill (1991: 33) | The talari was introduced as the national currency at par with the widely used silver Maria Theresa thaler. Talari is a form of the word "thaler." The Bank of Abyssinia, the central bank founded in 1906 with extensive British participation, used the gold-based pound sterling as its internal accounting unit. Ethiopia introduced decimal coinage in 1931. | |
| 15 February 1906
-August 1931 |
pegged; 1 Ethiopian talari = 1 Maria Theresa thaler = 23.44g silver | Ethiopia, concession granted by the emperor, 10 March 1905; Egypt, decree of 30 May 1905 incorporating the Bank of Abyssinia there; both cited in Pankhurst (1968: 495-6) | Established a central bank, so the exchange rate changed from fixed to pegged. | |
| August 1931
-May 1936 |
pegged; 16.65? Ethiopian talari = UKŁ1 | Ethiopia, decree of August 1931, cited in Mauri (2003a: 23); Pankhurst (1968: 487) | A parallel market of sorts existed during periods when the market price of silver exceeded the central bank's official price (Mauri 2003a: 24). The parallel market arose because the Maria Theresa thaler was a full-weight silver coin, not a "fiduciary" coin whose face value substantially exceeded its value as metal. | Ethiopia sought to avoid the effects of fluctuations in the exchange rate between silver and gold by introducing a gold-exchange standard through the pound sterling. On 21 September 1931, the United Kingdom suspended the gold standard. Ethiopia continued to use the pound sterling as the anchor currency. |
| May 1936
-about 29 April 1941 |
pegged; 5 Ethiopian talari = 1 Italian occupation lira (see Remarks) | Italian governor-general of East Africa, decree of June 1936; Italy, decree of 2 July 1936; both cited in Gill (1991: 57) | The Maria Theresa thaler was at a premium of 30% or more to the Italian occupation lira (Gill 1991: 58). | This was the exchange rate used by the Italian occupation authorities. Full-bodied coins continued to be widely used by Ethiopians. Italian East Africa had an issue of separately marked notes. Gill (1991: 58) remarks that the Italian occupation authorities alterdd the exchange rate from time to time, but gives no dates or rates. |
| about 30 April 1941
-14 April 1943 |
fixed; 1 Ethiopian talari = 1.875 East African shillings (1 shilling 10.5 pence), alongside use of East African shilling | United Kingdom, Occupied Enemy Territory Administration, decision of March 1941, cited in Rennell Rodd (1948: 367-9); Notice No. 3, April 1941, reprinted n Barclays Bank (Dominion, Colonial and Overseas) (1948: 63-4) | This was the exchange rate established by the British military authorities following the Allied liberation of Ethiopia during the Second World War. Full-bodied coins continued to be widely used by Ethiopians. The East African shilling was equal to the UK shilling. There was also a unit of account called the East African pound, equal to the UK pound (pound sterling). The official exchange rate was 1 East African shilling = 24 Italian East African lire, or 1 Italian East African lira = ˝ East African pence. Maria Theresa thalers, Egyptian government currency, and Indian rupees were also accepted as legal tender, though only Maria Theresa thalers (equal to Ethiopian talari) were somewhat widely used. United Kingdom, Occupied Enemy Territory Administration, notice of 4 April 1941 (cited in Gill 1991: 64) gave legal tender to Indian rupees. Indian rupees ceased to be legal tender in Eritrea on 1 May 1942 (Gill 1991: 64); it is unclear when they ceased to be legal tender in Ethiopia, but I assume it was around the same time. | |
| 15 April 1943
-22 July 1945 |
pegged 1 Ethiopian talari = 1.875 East African shillings (1 shilling 10.5 pence); alongside fixed, through use of East African shilling | Ethiopia, proclamation of 26 August 1942, cited in Gill (1991: 65) | Ethipia re-established a central bank, so the exchange rate of the talari changed from fixed to pegged. The central bank conducted banking operations, but issued no notes until 15 July 1945. East African Currency Board notes formed the note currency. | |
| 23 July 1945
-30 December 1963 |
pegged; 2.48447 Ethiopian birrs (Ethiopian dollars) = 1.50 Ethiopian talari = US$1, or 1 Ethiopian birr = US$0.4025 = 0.35769g gold | Ethiopia, Currency and Legal Tender Proclamation, No. 76 of 1945, cited in Talbot (1966: 89) | Pick's Currency Yearbook shows a parallel market premium typically in the teens. | The US dollar became anchor currency. Ethiopia registered a gold parity with the IMF on 18 December 1946 (IMF, 1st Schedule of Par Values, 18 December 1946: 5 [recheck]). Ethiopia adopted a spread of 2.48-2.53 birrs per US dollar, which was more than the 1% margin the IMF promoted for its members. Birr is from the Amharic word meaning "to be white," like a silver thaler (dollar). Eritrea began using the birr with it federated with Ethiopia on 15 September 1952. |
| 31 December 1963
-17 August 1971 |
pegged; 2.50 Ethiopian birrs = 0.355468g gold = US$1 | Ethiopia, Proclamation No. 206, 27 July 1963, translated in National Bank of Ethiopia annual report 1964: 20-6 | RR: Parallel market data begin in July 1970. Parallel market premium in teens. | A slight devaluation within the margins of adjustment permitted by IMF. Gold convertibility for all countries ended in practice when the United States abandoned the gold standard on 15 August 1971. |
| 18 August 1971
-20 December 1971 |
pegged (as part of a currency union); 2.50 Ethiopian birrs = 0.355468g gold = US$1 (nominal) | IMF ARER (1972: 146) | RR: Parallel market premium in teens. | Gold convertibility for all countries ended in practice when the United States abandoned the gold standard on 15 August 1971. |
| 21 December 1971
-14 February 1973 |
pegged; 1 Ethiopian birr = 0.355468g gold (nominally), or 2.30263 Ethiopian birrs = US$1 | IMF ARER (1972: 146) | RR: Parallel market premium falling to single digits. | Ethiopia did not follow the devaluation of the US dollar on 18 December 1971. Rather, it revalued and widened its dealing spread from 2.475-2.525 to 2.25082-2.35444 Ethiopian birrs = US$1. |
| 15 February 1973
-1974 |
pegged; 1 Ethiopian birr = 0.355468g gold (nominally), or 2.07237 Ethiopian birrs = US$1 | IMF ARER (1974: 153) | RR: Parallel market premium ranges from low single digits to 40%. | Ethiopia maintained its previous (now merely nominal) exchange rate with gold despite a further devaluation of the US dollar against gold. The IMF records that the name of currency was changed on 21 September 1976 from Ethiopian dollar to birr, but it was already known as the birr domestically. |
| 1974
-September 1976 |
pegged, dual rate; official rate 1 Ethiopian birr = 0.355468g gold (nominally), or 2.07237 Ethiopian birrs = US$1 | IMF ARER (1975: 173, 545) | RR: Parallel market premium peaks at 187% in November 1975. | The government prescribed commissions of 0.75% for purchases and 2.25% for sales of foreign currency, giving rise to an exchange-rate spread exceeding 2%. |
| September 1976
-31 March 1978 |
repressed (pegged, dual rate); official rate 1 Ethiopian birr = 0.355468g gold (nominally), or 2.07237 Ethiopian birrs = US$1 | consequence of Ethiopia, Proclamation No. 99, September 1976, cited in National Bank of Ethiopia annual report 1976: 5 | RR: Parallel market premium frequently above 100%. | With the nationalization of the financial system, the system became a monobank. The commissions that began in the previous period evidently continued (IMF ARER 1977: 517). An exchange of new-design notes for old-design notes began on 14 October 1976 and lasted until 18 October 1976 for higher-denomination notes and until 13 January 1977 for lower-denomination notes (National Bank of Ethiopia annual report 1976: 5). |
| 1 April 1978
-1983 |
repressed (pegged, multiple rates); official rate 2.07 Ethiopian birrs = US$1 | International Monetary Fund, Board of Governors, Resolution No. 31-4, 30 April 1976 ("Second Amendment") | RR: Parallel market premium typically in mid double digits. | The system of gold par values officially ended by agreement of IMF members. The appendix of IMF ARER notes that Ethiopia had import rates different from export rates, but the main text gives no details (IMF ARER 1979: 150-2, 467). |
| 1983
-30 September 1992 |
repressed (pegged); 2.07 Ethiopian birrs = US$1 | IMF ARER (1984: 184, 551) | RR: Parallel market premium generally rising, to 504% in September 1992. | Unified the exchange rate. Details are lacking. |
| 1 October 1992
-30 April 1993 |
repressed (pegged); 5 Ethiopian birrs = US$1 | National Bank of Ethiopia bulletin 1992/1993, no. 4: 32 | RR: Parallel market premium in 150-200% range. | Devalued as part of a package of economic reforms to start moving away from socialism. |
| 1 May 1993
-30 December 1997 |
independent float, dual rate | National Bank of Ethiopia bulletin 1992/1993, no. 4: 32 | The official rate
remained at 5
Ethiopian birrs = US$1
until 1994 (IMF ARER
1994: 167; 1995: 166).
RR: Parallel market premium gradually falling from above 150% to near zero by December 1997, remaining near zero until data end in December 1998. |
Introduced a floating auction rate alongside an official rate that was periodically adjusted according to the evolution of the auction rate. Two-tier banking resumed in April 1994. On 1 April 1994 the official rate was adjusted to reach 85% of the average of the marginal auction rates of the previous month; on 16 May 1994, 90%; and on 7 November 1994, 95% (IMF ARER 1995: 168). Ethiopia unified the official exchange rate in practice on 15 May 1995 and officially on 25 July 1995 (National Bank of Ethiopia annual report 1994/1995: 2; IMF ARER 1996: 169 ). However, banks were required to levy commissions of 0.5% on purchases of foreign exchange and 1.5% on sales, which accrued to the central bank; in addition, they could levy their own service charges of up to 0.25% on purchases and 0.75% on sales of foreign exchange. Accordingly, I continue to classify the system as a dual exchange rate. On 30 September 1998 an interbank market for trading foreign exchange began (IMF ARER 1999: 318). |
| 31 December 1997
-1999 |
managed float, dual rate | IMF ARER (1998: 329) | The IMF reclassified the exchange rate without explanation. | |
| 1999
-present (2005) |
managed float | IMF ARER (2000: 324) | The 1.5% tax on sales of foreign exchange continued, but IMF ARER ceases to mention the 0.5% tax on purchases of foreign exchange, so the exchange rate falls within my definition of a unitary rate. |