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Jan 28 , 2020
The International Monetary Fund (IMF) has downgraded Ethiopia`s prospect for economic growth in the current year by one percentage point.
The International Monetary Fund (IMF) has downgraded Ethiopia`s prospect for economic growth in the current year by one percentage point, from the 7.2pc it had projected earlier.
Concluding a report today, January 28, the IMF attributed the possible growth decline to a macroeconomic policy Prime Minister Abiy Ahmed`s administration has introduced hoping to deal with the structural imbalance in the economy. Ethiopia is dealing with external and domestic debt vulnerabilities, double-digit inflation and severe foreign exchange crunch.
Through the recently introduced economic reform program, the administration dubbed as “homegrown," the government pursues a policy of restraint in public expenditure and tighter monetary policies. These measures, the IMF hopes, will boost forex reserve to four billion dollars at the end of the fiscal year, enough to cover imports for two months.
However, directors at the IMF push the administration for further bold measures such as market-clearing exchange rate regime and the phasing out of the central bank`s financing of the federal government. They have also insisted for the state-owned Commercial Bank of Ethiopia (CBE) to go through asset quality review, and the Development Bank of Ethiopia (DBE) to deal with its high non-performing loans and develop sustainable financing model.
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