Ministers of Finance, Planning and Development, and Revenue Ministries have had a stay with Prosperity Party Media Studio in Amharic on different days in this week. They independently publicized that there has been a significant increase in the economic growth and internal revenues collection under the leadership of the ruling party-Prosperity Party-in the past six years and six months of this fiscal year.
Minister of Finance, Ahmed Shide, gave an explanation on the reforms and achievements in the economic sector. “Policy reforms implemented in the past years of the reform have helped to save the national economy from crisis.”
In his explanation, he recalled that the system before the reform was in dire challenges because it could not manage the economy properly. “Before the change, there was a period when the government’s revenue stagnated, the debt pressure increased, the lending capacity of banks declined, and the financial system not healthy in general.”
However, he said, with the policy reforms taken after the change, it was made possible to overcome the problems and to build a healthy economy that can achieve continuous growth. “For this reason, fiscal and monetary policy measures, improvements in foreign exchange acquisition, procedures to increase the participation of the private sector have been activated.”
Noting that the economy was dependent on limited sectors, he pointed out that the attention paid to a diversified economy after the change has yielded results. The works done to make banks contribute more to the economy are effective, for which the Commercial Bank of Ethiopia as an example.
The Minister also noted that the policy measures taken by the government have played a constructive role in the recovery of the economy by improving the performance of public enterprises in various fields including their revenues.
As well, he specified that making the market determine the foreign currency exchange rate did not only allow the parallel price to be close to the normal rate, but also reduced illegal business activities related to the sector boosting the economic growth.
He also pointed out that the Ethiopian economy has withstood the challenges it has faced and is achieving continuous growth and elucidated that subsidies have been given to basic commodities including fuel to control inflation. “Very encouraging results have been recorded due to the comprehensive efforts of the government. The policy measures have contributed significantly to the stability of the economy by obtaining a large amount of foreign currency from development partners and lending institutions.”
In the same way, the Minister of Planning and Development, Fitsum Asefa (PhD), elaborated that the economic policy which is being implemented resembles Ethiopia and solves the nation’s problems. “The reforms that we implement and the policies that we enforce are similar to our problems, stem from our problems, and not just related to any thoughts and theories.”
They focus on the real situations on the ground in the country, she noted questioning: “What is the actual situation of our country on the ground? It evaluates the challenges that our citizens may face on the ground. From this perspective, in the economic reform, more than 400 billion Birr subsidy budget is to be provided to the low-income and vulnerable citizens in various ways in this fiscal year.”
From this, salary subsidy is one which especially focused on low-income or low-paid citizens. “It is a subsidy that has increased the salaries 300 percent. More than 90 billion Birr is the salary subsidy budget reserved for Federal and States public servants,” she quantified.
The other is the subsidy related to fuel, she pointed out specifying it: “Since fuel is hundred percent imported in dollars, the increment in the exchange rate in the Dollar increases the amount we pay in Birr.”
As a result, if it is transferred to the citizens completely at once, there will be a problem in the market. Consequently, a subsidy budget of nearly 100 billion Birr has been reserved for fuel in this fiscal year. “In the last six months of this budget year, 72 billion Birr has been subsidized for fuel.”
Fertilizer is the other one that the government has budgeted subsidy for. “Chemical fertilizers are fully imported in foreign exchange. Again, due to the big exchange rate gap between Dollar and Birr, the Ethiopian government has increased the amount of Birr it pays to bring the fertilizer it needs,” she reasoned out.
But if the government transfers the entire cost of fertilizer to the farmers, firstly, there will be more farmers who cannot afford it and who will not be able to use fertilizers reducing production and productivity. “As well, it limits the livelihood and income of farmers and also affects their food security to that extent,” the Minister particularized the need to subsidize chemical fertilizers.
Not only this, it would also significantly reduce the production brought to the market. “Even if the farmer buys it, the price of their productions would increase significantly. As a result, the government made a huge subsidy on each quintal, and provided a fertilizer subsidy of 87 billion Birr in this budget year,” Dr. Fitsum noted.
Apart from this, medicines and edible oil are identified for subsidy in the economic reform. “In addition to medicines and edible oils, we have expanded our safety net program so that citizens who do not have their own income, the destitute, and uneducated cannot be employed to take advantage of the job opportunities created by the economy, and those who may be affected by the short-term effects of this reform can be benefited.”
For this, a subsidy budget of 60 billion Birr has been allocated from which about 22 billion Birr was transferred to the citizens in different ways during the last months of this fiscal year. “Generally, citizens will benefit from this comprehensive economic reform.”
Likewise, Minister of Revenues, Aynalem Ngussie, gave an explanation about the reform and the results achieved in order to enhance the nation’s revenues capacity. “Since the Prosperity Party started to lead the country as a government, especially after the first congress, we have been working with a big vision to build a country that is a symbol of African prosperity with a strong economy.”
In order to make this a reality, it is important to build a reliable and sustainable domestic financial capacity, Aynalem explained adding: “We are working with a big vision to have a country that can cover its own expenses by 2022 E.C collecting exhaustively the revenues that economy produces.”
One of the great agendas set at the first party conference was to build a strong and pressure-resistant economy, she recalled and note: “In order to achieve this, it should be taken as a prerequisite to improve the potential of reliable domestic revenues.”
To put it in figures, before the reformist leader Prime Minister Abiy Ahmed (PhD) took office, the revenues collection was stagnant and the last was less than 200 billion Birr, however, she explained that after the comprehensive reform, the collection of domestic and foreign tax revenues has grown significantly, from 336 billion the day after the congress to 442 billion in 512 billion Birr in the last Ethiopian fiscal year. And we have a plan to collect over 900 billion Birr revenues in the ongoing 2017 fiscal year.”
In general, the main purpose of taxing entities in the economy is to build schools, roads, hospitals and dams that citizens use together and to ensure equity. Therefore, it will play an important role in making the government’s power to levy and collect taxes active and ensure common prosperity.
The complete national economic reform carried out in 2017 E.C. has improved the nation’s capacity of collecting revenues that the economy produces so that economic activities or investment activities can continue to be encouraged in the most modern, convenient and fair competition.
In this manner, a huge income plan that can achieve the vision of creating a country that covers its national expenditure with its own income has been designed in 2017 E.C. And it is being worked on to collect 900 billion Birr in total national revenues collection from both domestic and foreign taxes that more than 450 billion Birr tax collected in six months indicates the success of the reform.
BY DIRRIBA TESHOME
THE ETHIOPIAN HERALD FRIDAY 31 JANUARY 2025
