BY ABEBE WOLDEGIORGIS
The effect of the macro economic instability manifested itself in various forms and among others, unemployment, imbalance in trade, scarcity of hard currency and inflation can be mentioned.
The newly introduced home -grown economic reform has an objective to resolve irregularities in the macro economy.
According to Prime Minister Abiy Ahmed, there are three areas targeted to be redresses through stabilizing macro-economy. The first one is reducing debt burdon borrowed from multinational corporations.
As it is known Ethiopia had been categorized as a country unable to pay its debt so that, prohibited to obtain new loan hence, reversing this situation to the better was a priority agenda to the government.
The second one is delay in completion of projects which are accustomed to consume extra budget and extended time. The government pledged to complete the projects and to create jobs since long ago but unable to do so. As a result, in addition to wasting time they left the nation to be indebted in billions of Birr.
Only the three years delay of the GERD construction, for instance, critically crippled the nation’s economy and made it to move in snail’s pace. Hence, accomplishing the construction in speedy way is essential. It can be mentioned that, delays in construction of industries, agro industry and other infrastructures such as roads incurred the nation additional cost.
The third one is improving the export performance. Prior to last year, export volume was plummeting for five years but last year, it recovered and showed increase.
The other thing which should be mentioned here is that, though the nation has abundant natural and human resource the wealth accumulated in the country is very small in volume hence, increasing through concerted efforts is essential. As a result, it enables to stabilize the market and ensures continuity of growth and overcome challenges that might encounter.
At the time of designing the homegrown economic reform plan, the government did not consider the out brake of COVID-19. Besides, the plan did not take into account the occurrence of desert locust and flood due to extreme weather conditions as well as the conflicts ignited in the country here and there. But the catastrophe witnessed on human health and agriculture consumed the nation’s finance, labor and other resources and the money that has been allocated for economic growth was wasted.
However, though the situation was unimaginable to predict, the nation, coping up with the challenges, could register the 6.1 percent economic growth. This made Ethiopia to be mentioned among the countries which registered good economic growth in the time of the pandemic.
Motivated by this achievement, international financial institutions could predict that Ethiopia can achieve positive economic growth in this budget year.
According to Dr. Abiy, the economic achievement witnessed last year is not simply achieved in a conventional way; rather, the nation devoted its time and resource both for preventing the spread of the virus and enhancing the economic growth. Most African countries went through lockdown in order to prevent the spread of the virus but unlike them, Ethiopia did not ignore the economic sector and energetically performed which resulted in better outcome.
For instance, most airlines all over the world were out of services due to the spread of the virus. But, though pressure was mounted from various corners, the Ethiopian airline could continue its service provision and this can be said that such activities are the secret behind the economic success.
Though recklessness witnessed currently which exacerbate the prevalence of the virus and accelerating death rate, the last year’s preventive measures of COVID-19 could reduce the spread of it. Regarding achievement in the economic sector, last year, Europe scored 0.7 percent economic growth, China scored 1.2 percent and some African countries scored 3 and 4 percent but Ethiopia scored the highest. This growth witnessed not only the nation’s growth in Gross Domestic Production (GDP) which has been more than 100 billion Birr but also in the per-capita income which is registered to more than 1 thousand USD.
But some argue that what citizens’ per-capita income rose to 1000 Dollar and registering 100 billion Birr GDP would mean while the poor is unable to get food once a day.
As to Prime Minister Abiy Ahmed, it is impossible to observe the trickled down effect of GDP per house hold level in short period of time. He further said that, for example, India scored a double-digit economic growth for a decade and enhanced its GDP but looking shanty towns in various parts of the country is common. The reason for this is the growth effect is not seen rapidly.
Similarly, China registered a miraculous economic growth and liberated millions from poverty but still looking poor people in rural part is common.
The two countries’ economic growth brought a shift in leading the world economy. Now China became the second affluent country in the world next to the USA in terms of GDP and in terms of export volume.
When it is said that, the Ethiopia’s GDP surpassed 100 billion Birr means that, the growth can be seen in export and import trade volume. The debt burden also can be taken as indicator of the GDP growth.
As compared to some African countries, Ethiopia has less debt burden but when it is measured in terms of GDP ratio, it is higher. That is why the Briton woods group categorized Ethiopia as a country unable to service its debt burden.
Foreign investors usually raise questions whether there is lasting peace or not and whether there is enabling environment to do the job or not before they begin their business.
In addition they raise issues such as vision of the government towards development, the number of population and the purchasing capability of the public.
The GDP figure surpassing 100 billion Birr and the citizens’ per-capita income reaching to 1000 Dollars has their own meaning in attracting foreign investment.
The achievement registered in the economic growth last year witnessed that it is the outcome of the efforts exerted by the government and the public at large both in mitigating the problems and hard working.
The Ethiopian Herald 22 April 2021