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IMF: Ethiopia to Grow by 8.5 percent

The International Monetary Fund said on Wednesday that Ethiopia will grow by 8.5 percent from July 2018 to June 2019. The country grew by 7.5 percent the previous year.

This assessment by the IMF is coming since the New Prime Minister Abiy Ahmed took office in April. According to the IMF, Ethiopia is benefiting from the Prime Minister’s policies of easing uncertainties in the country by improved domestic and foreign investments.

Ethiopia in a historic move signed a deal with Eritrea after many years of war and state of emergency between the two countries.

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The two countries restored diplomatic ties thereby opening up foreign partnership and investments. Flights and borders have also been reopened.

According to the Head of IMF Team Julio Escolano, “Growth is expected to step up in 2018/9 supported by stronger confidence as the uncertainty of the previous year recedes, and the unavailability of domestic and foreign direct investment improves.”

“The authorities’ strategy he said, is to shift the engine of economic activity to private sector development while the public sector consolidates is appropriate to maintain strong growth”

The new coalition in power is aiming for Ethiopia to reach middle-income status by 2025 and is pursuing manufacturing-led industrialization that has involved building roads, a railway, industrial parks -as well as mounting debt.

Escolano added that “At the same time, measures to reduce public sector borrowing and bring inflation back to target need to be intensified, as external imbalances and indebtedness remain a source of macroeconomic risk.”

Credit: Reuters Africa

 

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