The National Bank of Ethopia (NBE) accepted three offers from European companies last week who were vying for a contract to replace several denominations of the country’s current series of banknotes.
The UK’s De La Rue Currency, Germany’s Giesecke & Devrient, and France’s Francois-Charles Oberthur submitted technical offers to print an order of 50 Br and 100 Br notes valued at 52 billion Br – 46 billion of which will just be the 100 Br notes.
Once a successful applicant is chosen to fulfill the contract, they will have four months to the project. Government sources have said the country plans to eventually replace all the banknote denominations.
The new order of banknotes – the largest order made by the NBE ever – may not just be about replacing old notes according to some experts.
“Only 20 per cent of the new money is going to be used [to replace damaged notes],” a macroeconomist with knowledge on the issue told Fortune Magazine. “The rest is to be injected into the economy.”
Inflation and increased consumer transactions are a reason for the monetary injection, but some fear such a large transaction could make inflation in the country even worse.
“Macroeconomists are concerned that injection of new notes in the economy may exacerbate inflation, which has been a thorn in the government’s macroeconomic management,” wrote Fortune Magazine. “The IMF, after a visit from its mission, had released a statement arguing that the principal macroeconomic challenges for the country was surging inflation, whose main cause was the increase in broad money supply in the economy.”