BY ABEBE WOLDEGIORGIS
The ongoing war against the Junta and its proxies consumes the nation’s human and financial resources. If the war continues, much attention will be given for the accomplishment of the prioritized development projects, said the Ministry of Finance of Ethiopia.
According to Ministry State Minister Eyob Tekalign (Ph. D), the government is exerting its energy and resources for restoring peace as soon as possible but the ongoing war is creating havoc on the development endeavor.
Last year, early November, the TPLF insurgents made a military attack against the Federal Defense Force Headquarter located in northern front. Responding to the insurgent’s criminal acts, the government engaged in restoring peace, law and order by waging war against the insurgents and defeated them. And eight months later, the government forces withdrew from Tigray region by announcing unilateral cease fire. Instead of being abided by law and accepting the ceasefire, TPLF waged war and intruded in Afar and Amhara regions posing hundreds of thousands civilian eviction from the resident areas.
For the last three months, the government along with non-governmental organizations has been supplying basic and humanitarian needs to the displaced people in the two regions by allocating billions of Birr.
As to Eyob, even before the withdrawal of the Ethiopian Defense Force from Tigray, the government spent more than100 billion Birr for humanitarian purposes.
According to the state minister, even though the war is going on no development project has been interrupted or delayed. Nevertheless, if the humanitarian crises continue, saving human life will be a priority agenda and to some extent reduction of budget from road and irrigation projects might be taken as a preferable direction. “The war brings damage in terms of economic, social and political situation of the country and it must be ended in the way not to be seen another war in this country,” said Eyob.
Currently Ethiopia is devoting its finance, human resources and time for the accomplishment of projects such as roads, electric power, irrigation, railway, etc. In addition to these, other road projects which were scheduled to be constructed need half a trillion Birr.
In addition to the projects run by the government budget, there are other projects financed by multilateral organizations, private sectors, loan providers and grants. However, some multilateral organizations refrained from fulfilling their pledges to offer the money. As a result of the war in the northern part of the country, they chose to hold the finance.
In such manner, they tried to meddle in the internal affairs of our country. Westerners have different attitudes towards the war in Tigray and to some extent they blatantly support the Junta by accusing the government as if it besieges Tigray to blockade humanitarian aid.
Years ago, the International Monetary Fund pledged to support Ethiopia to pay its debt so that it implements its home- grown economic reform; and to that end by the year 2012 E. C, it agreed to provide technical support worth of 2.9 billion Birr.
Ethiopia is legible to obtain Extended Fund Facility from the International Monetary Fund; however, because of inability to pay the 30 billion Dollars of foreign debt with in extended schedule, IMF intended to hold the provision of 1.5 billion Dollars loan. Nevertheless, after having prolonged discussion with the G20 countries based on common framework loan providers committees decided to provide the suspended loan to Ethiopia and the debt repayment also extended for additional years.
In the coming months, IMF will analyze the total foreign debt burden of Ethiopia and will decide how much of its debt will be paid by recovering schedule.
Solomon Zegeye is an economist by profession and works as consultant. As to him, Ethiopia is a poor country and its debt repayment capacity is very law because there is huge gap between what it imports and what it exports.
Its export does not cover its 1/3 of imports which made it to stay in the negative trade balance. In fact, as a developing country, Ethiopia must import capital goods such as construction materials, chemicals, petroleum oil used as industry inputs.
It also imports agricultural inputs such as fertilizer, pest and herbicides and others because they are essential for production. Hence, to import the goods, it must allocate its meager foreign currency. But as to Solomon, what is the paradox is that though agriculture is the main stay of the nation economy which is a means of living for 80 percent of the population, the nation still imports agricultural products such as wheat, edible oil and other luxury goods. Such situation is unacceptable. Thus, taking import substitution particularly the agricultural products as a way out is essential.
As to Solomon, Ethiopia has large uncultivated land and unused water resources. Therefore, by cultivating the land through irrigation, substituting the imported wheat is possible. The ongoing irrigation farm for wheat cultivation both in the low and high land parts of the country should be strengthened.
The government also should focus on developing mining resources. Ethiopia has abundant minerals which can boost the export earnings. Currently, there are few local and foreign companies engaged in mining but as compared to the potential the sector’s contribution to the economy is negligible. Therefore, supporting the sectors institutionally and legally is essential.
As to Solomon, similar to other developing countries remittance can play crucial role to boost the nation foreign currency reserve. More than 2 million Ethiopian Diasporas are resided all over the world. Ethiopia in the last budget year could obtain more than 6 billion Dollars from the diaspora in the form of remittance. But still significant amount of foreign currency comes through informal channel out of bank and the money circulated in the illegal channel critically hits the nation economy and threats the security.
Therefore, encouraging Diasporas to send their money through the banking system is vital. The introduction of new directives by the National Bank of Ethiopia to attract Ethiopian Diasporas to open bank account in Dollar can be taken as exemplary.
The Ethiopian Herald October 26/2021
