- Says foreign Debt reaches 26 billion USD
- Fears Contraband could quash Gold export revenue
- Says amending ten finance related proclamations
ADDIS ABEBA – Ethiopian Central bank has projected for economy to grow by 7.7 % at the end of 2018/19 fiscal year, that started in July 8, 2018.
YinagerDessie, governor of national bank of Ethiopia (NBE), said the economy is still recovering from the impact of the two years long insecurity.
Ethiopia’s economy registered similar growth rate in the previous fiscal year, despite government’s double digit – 11.10 percent – projection.
“We expect a growth similar rate with that of the previous fiscal year,” the governor told reporters at his office.
Ethiopia’s economic growth has been experiencing a slowdown since 2016 due to various internal and external factors.
Despite pinning high hopes on its manufacturing sector, the central bank said it’s yet to take off from the ground.
“The sector is improving but it has not produced enough yet to affect our foreign currency need,” he said.
Yineger also mentioned factors such as increasing contraband trade, debut burden and price fluctuation for Ethiopian agricultural produce in the international market are still affecting the economy.
Ethiopia’s main export revenue source is mostly dominated by agricultural commodities including coffee, cereals, oil seeds and other produces, constituting its 73 percent of total export.
However, the export sector has limitations both in terms of quality and quantity, said the governor, adding the country has to work on to penetrate new market for its produce.
He said the agricultural sector is not producing enough for export, let alone feeding the local manufacturing industries, that are still starved of primary resources.
“They are still forced to import raw material abroad including wheat,” Yineger said, revealing that government’s plan to increase the budget share of agriculture in the next fiscal year with an objective to improve its performance.
– Contraband –
The central bank said the issue of foreign currency shortage will not be solved by increasing the agriculture sector alone.
He stressed on the need to devise effective policy and administrative and legal proceedings to deter contraband,
This will help increase Ethiopia’s dwindling earning from gold export, officials said, .
“Due to the increasing contraband trade, the amount of foreign currency Ethiopia received from gold export in 2017/18 fiscal year declined to 32 million USD,” he said.
The east African nation earned over 430 million USD from gold export in 2014.
If there is no significant government interference, he Yineger said the annual earning could even get lower than that of last fiscal year.
The central bank also revealed that Ethiopia’s total debt has so far reached 26 billon US Dollars, and the time for payment for most of loans has reached.
“We have started to pay this debt and this has exasperated foreign exchange shortage in the country as we are paying from our reserve”.
On improving laws
The national bank is currently reviewing at least 10 proclamations and directives, and will be subject of amendment.
“When the ongoing amendments are complete, there will be unprecedented breakthrough in terms credit,” Yineger said, adding their intentions are decreasing unemployment as well as poverty rate in the country.
The bank also said it will introduce a regulation that will allow Ethiopians in the diaspora to invest in the financial sector.
DrYinager, however, rejected rumors of new exchange rate adjustment on foreign currency.
“The government has no plan to make any adjustment. However, it will take administrative measures to narrow the gap between the black market exchange rate and the legal one,” he said.
Except Development Bank of Ethiopia (DBE), Yineger said all banks are “in healthy condition”.
Their debt collection, loan distribution and capital flow are being carried out in remarkable way, he said. “There is a glimpse of hope in this sector”.
He, however, criticized the development bank of Ethiopia, which, he said, “has been in a terrible condition for years”.
“The Bank should go through in a major reform,” he said, “Otherwise it will be difficult for the bank to go out of its current status”.
Development bank of Ethiopia has provided over 6.3 billon birr loan in the name of agricultural investment for a years. Most of this money was allegedly provided through illegal networks.(The Daily Monitor )