Intl. financial institutions vs homegrown economic reform

International financial institutions can play positive roles in realizing Ethiopia’s homegrown economic reforms by catering to Ethiopia’s interests. Lately, Ethiopia introduced homegrown economic reforms and economists see global financial organs to continue to be strong partner in bankrolling the much-needed foreign currency helpful to realize the new plan.

World Bank and International Monetary Fund (IMF) have been among the leading providers of financial assistance and credit to the country. Last year, both institutions have also bankrolled huge share of foreign currency.

On the other hand, the two financial giants have been encouraging Ethiopia to adopt more market-oriented policies which the country is already doing. With the economic reform also aiming to revive the country’s private sector and spur investment and job creation, the financial institutions remain strong partner.

Recently, the country also held forum to brief international development partners and the diplomatic community on the homegrown economic reform agenda where Prime Minister Dr.Abiy Ahmed called on development partners to continue strengthening their supports.

Acknowledging that the next capture

 of Ethiopia’s growth and development requires more active private sector, Prime Minister Abiy said: “We have opened up key economic activities to private investment.”

International development partners who participated in the discussion praised the country’s efforts to reduce poverty and to continue economic growth. They stated that they would provide financial and technical supports for the implementation of the economic reform.

The institutions have been pushing the country to ease its restrictive business

 environment which is now relaxing, Dr. Hailu Elias Assistant Professor of Economist at Addis Ababa University tells The Ethiopian Herald.

He says donor countries and global financial organs can help Ethiopia’s economic reform in many ways. And it is up to the country to strike a balance between its interests and the support it requires from the financial bodies.

Most of the economic measures the country has been taking are very much aligned with the reforms the institutions have been advocating for long time. And the country’s new reforms are said to

 overcome some of the main economic hurdles, according to him.

Homegrown economic reform is a more programmatic and realistic approach towards economic challenges. And there is a part to be played by donor countries and global financial institutions in supporting the reform by supplying financial and technical assistances. While international organizations push for more economic liberalization and privatization, the country needs to carefully handle the transition and the process, he argues.

There are ways where the country and

 the donor countries as well as global institutions can collaborate to sustain the country’s economic development and its challenges, he adds. However he says part of the government’s responsibility is to make sure that no financial institutions are able to patronage it as imposing polices and interest.

Financial mediators perform a significant role in the development of the country. And, the homegrown economic reforms, if executed effectively, will address the major economic hurdles. And the execution requires the concerted efforts of the government and other partners such as global financial institutions, says Dr. Tadele Ferede, President of Ethiopian Economic Association.

Unlike previous times, the World Bank and IMF are not in the position to impose the polices and interests. The approach is changing these days, countries deign their development programs, and the institutions support them. According to his days are gone where the institutions set preconditions to provide finance to other countries as the alternatives increase.

For the reform to hit its target, the government needs to revise its existing institutions. Enforcing tools are yet to be identified to execute the reform program. Unless, the institutions are transformed, the reform could face setbacks, he concludes.

The Ethiopian Herald October 4/2019

BY DESTA GEBREHIWOT