Day: March 21, 2023

The Government of Ethiopia has been effective in implementing different policies and response measures to avert the impacts of internal and global shocks on the economy, Finance Minister Ahmed Shide said.

Speaking at the 55th Conference of African Ministers of Finance, Planning, and Economic Development hosted by the UNECA, the minister stated that COVID-19, the Russia-Ukraine war and internal conflicts as well as climate change have mainly affected many African countries.

And Ethiopia’s economy has similarly faced the impacts of the above.

With the introduction of the Home-Grown Economic Reform and fiscal and monetary policy responses as well as boosting production and precautionary health measures, however, Ethiopia has succeeded in withstanding the shocks and registering growth, he elaborated.

According to him, the production of wheat and maize in particular was boosted, health equipment were manufactured massively to prevent spread of the pandemic and digital financial services improved.

Following the global fertilizer price increase, the government has been subsidizing the purchase of fertilizers to help boost agricultural production and ensure food security.

The National Bank of Ethiopia also injected funding into commercial banks that had been experiencing liquidity challenges, personal income tax payments postponed, bank loan repayments rescheduled, and tax amnesty given to different sectors, among other measures, Ahmed pointed out.

However, despite the gains registered by introducing and implementing various measures, forex distortions, fiscal deficits, and rising inflation remain major economic setbacks to the economy.

Therefore, the second version of Home-Grown Economic Reform will continue to consolidate the gains and address the current and emerging challenges, the minister added.

Joint United Nations Programme on HIV/AIDS Executive Director, Winnie Byanyima on the occasion hailed Ethiopia’s response to the shocks and observed that the biggest challenge for Africa is access to fair financial services.

Even before the COVID-19 crisis and the war in Ukraine, countries were borrowing at an interest rate of over eight percent, while the high-income countries borrowed at lower rates as low as one percent, she revealed.

The high cost of borrowing is taking away Africa’s prospects of achieving SDGs, the executive director stressed.

Moreover, Byanyima stressed that the challenge of not being able to borrow in countries’ own currency points to how countries are being treated unequally on matters of access to affordable finances.

Hence, she stated that there is a need for countries to tackle the high cost of debts, connect financing with SDG achievement, and push harder for Africa to have a seat at the G20 forum.

Source: Ethiopian News Agency

The UN Economic Commission for Africa’s (UNECA) has called for Africa’s economic growth to be inclusive to reduce widespread poverty.

While the world was still fighting the COVID-19 pandemic, the war in Ukraine broke out in early 2022.

The impact of the two shocks has been exacerbated by the higher frequency and intensity of natural disasters, it was indicated.

UNECA Deputy Executive Secretary and Chief Economist Hanan Morsi told the fifty-fifth session of the ECA Conference of African Ministers of Finance, Planning and Economic Development in Addis Ababa, that the three overlapping crises have pushed more Africans into extreme poverty and resulted in increased inequalities and vulnerabilities on the continent.

Morsi said that there were significant levels of poverty and inequality in Africa even before recent global crises but now poverty has worsened, and inequality has widened.

“Today, 546 million people are still living in poverty, which is an increase of 74 per cent since 1990”, stressed Morsi. “Global shocks have ripple effects on the poor in Africa through inflation, which, in 2022, stood at 12.3 per cent, which was much higher than the world average of 6.7 per cent”.

ECA estimates that households in Africa spend up to 40 per cent of their income on food, and the impact of global crises has hit the poorest households in Africa severely.

A staggering 310 million Africans experienced some form of food insecurity and 6 million Africans faced extreme hunger in 2022.

According to recent research, the 10 African countries with the highest levels of poverty in Africa are Burundi, Somalia, Madagascar, South Sudan, the Central African Republic, Malawi, the Democratic Republic of the Congo, Guinea-Bissau, Mozambique and Zambia, in each of which between 60 per cent and 82 per cent of the population is poor.

The commissioner for Trade and Industry of the African Union Commission, Albert M. Muchanga told the conference of African Ministers of Finance, Planning and Economic Development that although Africa is the richest in the world in terms of natural endowments, we are the poorest.

African reliance on imports makes the continent vulnerable to commodity price shocks. In 2021, 39 African countries were net importers of food products. In addition, in 2021, Africa exported only 5.7 billion USD of refined petroleum products but imported over 44 billion of them.

“Coming out of the low levels of income and wealth is now being made more challenging by climate change as seen in the recent flooding in Madagascar Malawi and Mozambique” stressed Muchanga. “We must add to this, the looming debt crisis which could undermine all the growth achievements of the past 23 years”.

Experts and Ministers at the conference noted that African countries continue to face declining revenue, rising debt stress and increasingly constrained fiscal space.

In 2022, the government debt-to-GDP ratio in Africa was 64.5 per cent, which is significantly higher than the pre-pandemic figure for 2019 that was 57.1 per cent, according to ECA.

The two day-conference of African Ministers of Finance, Planning and Economic Development was convened under the theme: Fostering recovery and transformation in Africa to reduce inequalities and vulnerabilities.

Source: Ethiopian News Agency

The Council of Ministers has decided to raise the authorized capital of Ethiopian Railways Corporation (ERC) to 221 billion Birr, according to the Office of the Prime Minister.

In its regular session today, the council instructed the ERC to complete infrastructures under construction and to make the completed ones operational.

The regulation on the corporation would accordingly become effective from the date of its publication on the Negarit Gazette.

Moreover, the council discussed various issues and referred proclamations to the House of People’s Representatives (HPR) for endorsement, it was learned.

The council also discussed a draft proclamation on public enterprises. The bill is aimed at ensuring the transparency and accountability of the corporate management system of public enterprises, strengthening their competitiveness and efficiency through modernizing their corporate finance management system.

The bill is expected to improve the debt burden of the enterprises so that they can effectively discharge their social responsibilities without affecting their profitability.

More importantly, it enables the state-owned enterprises to contribute to the country’s economic development, it was learned.

The council referred the draft proclamation to the House of People’s Representatives for endorsement.

The other draft bills tabled for discussion were proclamations designed to approve the agreements Ethiopia has concluded with the Luxembourg government and the Swiss Confederation for avoidance of double taxation and tax evasion prevention.

During the discussion, it was noted that the proclamations have significant contributions towards encouraging investors to invest their resources in Ethiopia.

The bills were subsequently referred to the House of People’s Representatives for approval.

Source: Ethiopian News Agency