PM: Ethiopia Registers 6.1% Economic growth 2019/2020 FY

ADDIS ABABA – Ethiopia’s economy has registered a 6.1 growth in the 2019/20 fiscal year despite the impacts of COVID-19 pandemic, Prime Minister Abiy Ahmed said on Tuesday.

His administration had a target for the economy to expand by 10.8% the fiscal year, up from 9% in the previous year, in a plan prepared months before the pandemic hit the country.

“Our main focus through the homegrown economic reform has been to reduce the debt burden, complete unfinished projects, and increase revenue,” the Prime Minister said.

The economy, however, faced “with enormous obstacles” COVID-19 pandemic in addition to locusts, floods, and sporadic conflicts, the PM said while adressing the parliament.

“Although COVID19 was not taken into account when planning, we had to respond to the crisis as well,” Abiy said. “Ethiopia’s economy has grown by 6.1 percent”.

During his parliamentary address, Prime Minister Abiy has also touched up on various subjects related to the economy.

He said:

On the Fiscal Policy performance
“Fiscal policy performance, on the other hand, is still low despite improvement. 20 percent growth has been observed in 2012 E.C while the following year has shown 30 percent increment.

In the first eight months of this fiscal year alone, 191 billion birr has been earned.

Our capital expenditure in 2012 E.C was 124 billion, and this year’s budget is 160 billion. As capital revenue increases, projects can be completed at the necessary pace.”

On public investment

“Excluding agricultural loans for farmers, agricultural capital which was 25billion birr in 2010 E.C. has now grown to 34 billion birr. If 100 billion birr could be allocated for agriculture, our production will increase accordingly.

Over the past three years, we have made great strides in constructing roads, believing that market linkages will be highly improved.

The annual budget of the health sector has doubled. We have focused on improving the quality of education and reforms especially in secondary high education. We have been able to increase our capital expenditure with the addition of administrative, legal, financial, and anti-corruption measures.

On Increasing Saving

“Cash distribution has increased by 15 percent, savings by 20 percent, and loan by 38.4 percent. Efforts to curb smuggling and money laundering have led to a reduction in cash transfer and increased revenue and savings. 6.2 million citizens have opened bank accounts and saved 98 million birr. This has enabled farmers to modernize their finances.

It has also provided an opportunity to measure how healthy the financial sector is. The bank transfer target that was estimated to be 730 million birr has shown increment where 899 billion birr has been generated.

Within the past six months financial institutions have increased their savings to 1.2trillion birr.

On Inflation

“Inflation has been a growing problem for the past 15 years. This is especially detrimental to the poor whose average expense of food is 54 percent, rent is 16-20 percent, and clothing is 5 percent.

If the first two expenses were minimized, 80 percent of the pressure would be eased. To improve the supply chain, the government has started buying and distributing from the private sector. But it is not yet enough. Efforts are being made to control and take action against thousands of greedy traders which need collaborative effort.”

On Impact of Fuel Import

“We need fuel for almost all our activities that the government subsidizes. The expense of fuel greatly decreases our export earnings.

With government subsidies, a liter of fuel is sold for a lesser price than neighboring countries. In just a single month, the government subsidized 3 billion birr for fuel.

The fuel supply chain is very complex starting from the source to the market. At the source, it is sold in contraband for cheaper prices.

We don’t have standardized infrastructure for the sale. If this cannot be improved, inflation will continue to rise. Because the subsidy is for everyone, high-income communities also get fuel at a cheaper price. We need to devise a way to subsidize only transportation providers.

On Election 2021

“Our success is to make the election free and democratic. It should be Ethiopia’s victory. I have personally tried to ensure that eligible parties take part in the election.

No matter how fair and healthy an election is, it does not guarantee democracy except providing a foundation for democratic rule. Democracy is a process that takes years.

Parties need to leave the old tradition of being an escort and start competing as there is no better time to do so. The election will take place as the Ethiopian people must vote and move past bottlenecks.

On Modernizing agriculture

“Modernization of agriculture is our priority. Cluster farming promotes modernization and increases production. There are encouraging initiatives in terms of irrigation and water conservation.

Since the production of Teff is painstaking, we have started importing machinery to assist the process. Summer wheat production, expansion of irrigation and facilitating financial services are also areas of focus.

On giving attention to ICT

“When it comes to ICT (Information and Communication Technology), so far we have launched two satellites and artificial intelligence is in progress. Crime prevention using technology is under way.

Turning clouds into rain, in particular, has been successful in North Showa and Gojjam areas. Since all sectors need technological support, the ICT sector will continue to receive widespread attention.

On manufacturing sector

“In terms of industry, the already existing factories are producing about half of their capacity due to lack of inputs, energy, spare parts and the challenge of bureaucracy. If we fix these bottlenecks, the production will double.
Even a single factory can make a big difference in the market by providing supplies, including cement.

On performance of Mining

“Significant improvements have been made in the mining sector. Apart from gold, the finding of other minerals could be a major source of foreign exchange. The potential in tourism can easily be seen.

On Challenges

“There are many challenges and problems. There are also many growth opportunities and hopes. So let us collaborate and support each other. There is no Ethiopian that will be [negatively] affected by Ethiopia’s development.”

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