IMF Calls for Economic Policy Adjustment

Feb 27 , 2021

The International Monetary Fund (IMF) has called on Ethiopian authorities to reorient economic policies, citing economic challenges exerted by the Novel Coronavirus (COVID-19) pandemic, locust infestations, and the domestic security situation. This comes after a team of its staff led by Sonali Jain-Chandra held virtual discussions with Yinager Dessie (PhD), governor of the central bank, Ahmed Shedie and Eyob Tekalegn (PhD), minister and state minister of Finance, respectively, in January and February 2021. Unlike its earlier projection of flat growth in GDP, the IMF now says Ethiopia's economy will grow by two percent during this fiscal year, with an impressive rebound of 8.7pc the following year. The IMF attributed this outlook to budgetary expansions aimed at offsetting the impact of the pandemic, humanitarian assistance and reconstruction in Tigray, as well as measures in the borrowing and governance of state-owned enterprises. Nonetheless, it sees inflationary pressure due to rises in food prices and uncertainty as "ongoing challenges" Ethiopia will continue to face. Consumers are under pressure due to recent spikes where goods and services, from bread to rent and transport, have witnessed a doubling of prices. The value of the Birr against other currencies also continues to depreciate, with a 35pc drop over the past two years.