Ethiopia - Interview with Abegaz Kibrework Shiyota
This week, the government of Ethiopia has announced the introduction new currency notes, with enhanced security features. The association in its press release indicated that thorough analysis would be necessary to quantify the potential effects of the demonetization.
There are areas that are likely to be affected and still would require further investigation. According to EEA the immediate impacts may include a surge in deposits and hence savings; removal of fake currency notes. Apparently EEA in its statement also predicted that “black money” stock could also be wiped-out from the economy and size of taxable economy may increases at the revenue end.
Furthermore, the association indicated that increased number of people with bank accounts may occur, which subsequently could increase financial inclusion that could be as immediate impact.
EEA also indicated some medium to long-term impacts that potentially could result following the demonetization. In this regard it described that it was likely to increase in government revenue as more taxable money is declared and hence brings more businesses in the tax net. Stabilization of inflation is also anticipated.
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