The Ethiopian government has taken various measures to improve the economic landscape of the country. It has also launched a new economic reform plan called homegrown economic reform agenda with a view to achieving a high quality sustainable economic growth and vast array of job creation.
It was noted that the initiative aims at taking the macroeconomic, structural and sectorial reforms that are said to pave the way for job creation, poverty reduction, and bringing about inclusive growth. It also eyes at buttressing agriculture, manufacturing, mining, tourism, and other sectors.
According to the International Monetary Fund (IMF) report, Ethiopia’s Homegrown Economic Reform Program is designed to eliminate macroeconomic imbalances and lay the foundation for sustainable and inclusive growth.
The government has been taking measures by formulating economic reform agenda to solve the macro-economic imbalances and sustain the country’s growth path. The government has achieved many encouraging results, so said Prime Minister Dr. Abiy Ahmed while he responded to questions posed by Members of the House of Peoples’ Representatives.
“Before two years, Ethiopia was under budget deficit. Even the country had no potential to pay salaries as it was at high risk of debt distress that incapacitates it to get more loans for indispensable projects,” he stated.
The economic reform agenda has had three basic pillars: correcting macro-economic imbalance, solving structural bottlenecks and empowering manufacturing sector, according to him.
There was macro-economic imbalance in the country – currency shortage, bad export performance, debt distress, weak revenue collection system, unstable price of commodity and extended inflation, incompetent financial sector, and unbalanced budget allocation, he said adding, another significant issue was solving structural bottlenecks that cause holding back the country’s economic growth.
He said, “We have to capitalize our time, money, and knowledge on areas that create more wealth. If we do not utilize all our potentials in the manufacturing sector to increase production and productivity, we cannot solve macro-economic imbalances and sustain economic growth trajectory.”
Describing government’s support to the private sector, he said that the government is taking different encouraging measures for the private sector to help them play their part in due process of building the economy of the country. In 2017/18 fiscal year, the government allocated 90 billion ETB for the private sector and this fiscal year the government allocated 160 billion ETB for the private sector.
“The government has taken measures on financial institutions to improve the involvement of private sectors. The government also lifted the 27% NBE bond restriction,” he indicated.
“Reducing budget deficit and debt distress are the main areas showing remarkable results in the economic reform agenda over the past two years,” he stated.
According to him, Ethiopia’s external debt was 31% of its GDP. And most debts are commercial loans which are very expensive and it must be paid within the shortest time possible. Because of this, the country was unable to get additional loans. But now, the debt has decreased into to 25% through government’s successful effort. As a result, if we need additional loans, we can get loan. Of course, additional activities are underway regarding the aforementioned issues.
Not only is Ethiopia reducing the debt stress but it is also rejuvenating diplomatic works to convert the commercial loans to concessional loans.
The government has facilitated the importation of all agricultural machinery duty-free. It has also provided farmers with favorable conditions to obtain loans from banks and purchase machinery, he said adding, various supports have been provided to the manufacturing sector to focus on domestic and foreign demand, he added.
The Ethiopian Herald July 24, 2020
BY ABDUREZAK MOHAMMED
