BY LAKACHEW ATINAFU
The past few years have showcased that Ethiopia has been on a precarious journey due to internal conflicts, global pressures, and, other manmade and natural disasters. The turmoil in some parts of the country and natural phenomenon such as the COVID-19 pandemic and locust infestations have posed a substantial threat to the economy.
It is a universally accepted fact that man-made and natural disasters inevitably affect the economy of a certain country. The case appeared to be double or triple jeopardy for emerging nation. As calamities escalate, it is likely to tempt the existence of nation.
Amid all this, according to authorities, the country has averted all ill winds and began to manage to fix economic casualties in a relatively short time span. Ethiopia’s economy has resisted all kinds of pressures and continued to record positive growth, changing the economy from a recession to a higher growth trajectory, and the gross domestic product is expected to reach 156.08 billion dollars in 2030/31, the Federal Government Communication Service announced.
In the statement given by the Minister of Government Communication Services, E.F.D.R. Legese Tulu (PhD), regarding the current and future directions of the government, he mentioned that recently there have been forums involving the top leaders of the country, including the Prime Minister, and there has been a wide discussion on the medium-term draft plan for the implementation of the second indigenous economic reform, national economic development, and prosperity.
Pointing out that the Ethiopian economy continues to register positive growth by facing all external and internal challenges and that it is possible to understand from the nine-month performance evaluation that 7.5 percent growth is expected in the current fiscal year, he said that the gross domestic product is expected to reach 156.08 billion dollars by 2030/31 by changing the economy from a recession to a higher growth trajectory.
According to the minister, in order to strengthen the achievements of the past economic reforms and to correct the gaps, it is believed that in order to have a stable macro-economy in the country, it is necessary to carry out homegrown economic reforms, and it is being discussed at every level.
The minister stated that the second home-grown economic reform was based on the achievements of the economic reform of the past years. He pointed out that, apart from correcting macro-economic disorders, it aims to achieve the goals of ten-year development plans by accelerating economic reconstruction and building national development capacities.
He further pointed out that the reform will ensure macroeconomic stability, improve the investment and business environment, increase productivity and competitiveness, and strengthen the government’s capacity to execute. He said that the implementation of reforms should be based on the commitment of the leadership and the broad movements of society.
He mentioned that they are currently being discussed and will be implemented in the next three years. According to the minister, in the second phase, it is believed that homegrown economic reform will lay the foundation for a sustainable economic structural transition.
It is hoped that it will strengthen the private sector, improve digitalization and productivity, and ensure quality, sustainable economic growth. It is believed that by expanding international trade and making the supply chain more efficient, it will lay the foundation for foreign direct investment opportunities and the improvement of citizens’ lives.
He pointed out that the economy has withstood all the pressures of the corona epidemic, internal conflicts, the war between Ukraine and Russia, drought, floods, locusts, and development partners’ failure to fulfill their promises and continued to grow, which indicates the effectiveness of the indigenous economic reform implementation.
He stated that measures taken in taxation, controls on foreign and domestic loans, and reforms on subsidies brought about improvements in fiscal discipline and contributed to the growth of tax revenue and the reduction of debt stock.
Pointing out that the share of government debt in the national product is decreasing significantly, he added that the direction of the pluralistic economy followed by the government and its ability to accelerate and create indigenous economic reform have been able to overcome problems, ensure the continuity of development, and turn challenges into opportunities.
The result is the combined efforts of the entire people and the leadership at all levels that external pressures or man-made or natural disasters could not stop it.
In the future, expanding investment and increasing the national savings rate, striving to cover a healthy government budget deficit, stabilizing inflation and the cost of living, addressing unemployment problems, narrowing the balance of payments deficit, improving the supply of foreign currency, accelerating economic structural change, and updating the domestic market system should be carried out in the following manner.
Consensus has been reached in subsequent forums to alleviate the nation’s economic hazard, which has passed through temptation over the preceding years,” said the Minister. In this way, the economy has been changed from a broken state to a higher growth path, and the gross domestic product is expected to be 156.08 billion dollars in 2030/31.
On the other hand, upholding the rule of law in the country is the primary task of the government, the minister said. Noting that because conflict endangers the safety of citizens, it is being implemented in a direction to get rid of the spirit of hatred of gambling, he said that following legal measures taken by the government, peace has been restored in the Amhara region, which was intensified in the region no less than any other area, and the peace-making work started with Shene will continue as well.
In connection with the recent misuse of aid, the allegations brought against the government by partners are unacceptable and constitute mere propaganda. He also mentioned that cutting off aid without sufficient investigation is against the cardinal principles of international law and harms the benefiting citizens. However, if there are perpetrators, the government believes that they should be brought to justice.
Documents tell us that the IMF had approved a program for Ethiopia of almost US$3 billion. The program is aimed at supporting the Ethiopian government’s own Homegrown Economic Reform Program, which is designed to eliminate macroeconomic imbalances and lay the foundation for sustainable and inclusive growth. Successful macroeconomic reform requires coordination and synchronization among foreign exchange markets.
The monetary, fiscal, financial, and capital market reforms to balance the urgent need for addressing macroeconomic imbalances with the need to minimize the potential economic costs of rapid (‘shock therapy-type) reforms will be implemented over the course of years with careful calibration of the pacing, sequencing, and timing of specific reform measures.
The reform agenda will be implemented through a structured and coordinated whole-government approach. The Ministry of Finance will lead and oversee the implementation of the agenda through the Macro-Economic Committee, which reports to the Prime Minister. Each pillar—macro-financial, structural, and sectoral—will be coordinated through a sub-committee comprised of relevant offices.
Implementing the proposed reform agenda requires the mobilization of financial and non-financial resources. Enhancing domestic revenue mobilization, particularly significant improvements in tax collection, coupled with external resource mobilization, will be at the core of the reform agenda for financing strategy.
The Ethiopian Herald June 15/2023
