The International Monetary Fund (IMF) said Ethiopia’s economy is forecast to expand to 8.5 percent in the July 2019 to June 2019 period from 7.5 percent in the previous fiscal year. In the country’s first assessment since Prime Minister Abiy Ahmed took over in April 2018, the IMF noted that Ethiopia was benefiting from easing uncertainty and improved domestic and foreign investments.
Ahmed, who signed a peace deal with Eritrea, lifted a state of emergency and promised to partially open up the government dominated economy by attracting foreign capital to the state telecoms company and airline.
Julio Escolanco, head of an IMF team that visited Ethiopia said “growth is expected to step up in 2018/2019…supported by stronger confidence as the uncertainty of the previous year recedes, and the availability of foreign and direct investments improves”.
He added that “the authorities’ strategy to shift the engine of economic activity to private sector development while the public sector consolidates is appropriate to maintain strong growth”.
The Ethiopian People’s Revolutionary Democratic Front (EPRDF) coalition, which has been in power since the removal of a military junta in 1991, aims for Ethiopia to reach middle income status by 2025 and is pursuing manufacturing-led industrialisation, that has involved building roads, a railway, industrial parks, but could also encourage mounting debt.
Escolanco noted 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”.