Fortune News | Oct 23,2021
May 25 , 2019
By FASIKA TADESSE ( FORTUNE STAFF WRITER )
The rapprochement with Ethiopia and the lifting of international sanctions would have a positive prospect of dragging Eritrea out of its economic morass and its ‘difficult situation’, according to a staff report released by the International Monetary Fund. The rapprochement with Ethiopia and the lifting of international sanctions would have a positive prospect of dragging Eritrea out of its economic morass and its ‘difficult situation’, according to a staff report released by the International Monetary Fund.
Led by Bhaswar Mukhopadhyay, the IMF team was in Asmara from May 13–22, 2019, for a consultation on its annual report. During the 10-day stay of the team, the mission met Eritrean ministers of Finance, Health, Tourism, National Development and Agriculture and the acting governor of the Central Bank to compile the report, which is the first in a decade.
The Eritrean-Ethiopian War and the related international isolation deprived the country of vital investment, trade opportunities and external support, leaving the economy in a 'problematic situation,' according to the staff report.
“Eritrea has just emerged from twenty years of conflict with Ethiopia and a decade of sanctions imposed by the international community,” reads Mukhopadhyay’s statement in the report.
Led by Bhaswar Mukhopadhyay, the IMF team was in Asmara from May 13–22, 2019, for a consultation on its annual report.
The mission’s report also indicates that the information base of economic developments in the country has deteriorated, giving rise to data and capacity constraints.
Dominated by agriculture and mining, Eritrea's economy is highly vulnerable to shocks, warns the report.
“Most of its population is engaged in rain-fed subsistence agriculture, which is exposed to repeated droughts,” it adds.
Due to regional drought, the country's GDP fell sharply in 2017.
The drought has pushed the malnutrition rates in Eritrea to exceed emergency levels, according to the Nutrition Sentinel Site Surveillance System of the United Nations Children's Fund.
A sustained period of high fiscal deficits, reversed over the past three years, has led to a massive public debt burden, a vulnerable banking sector and scarce foreign exchange, according to the report.
Despite these obstacles, the report praised the authorities for achieving 'remarkable progress' in the health and educational sectors and for having prioritised public investments in earlier years.
Looking ahead, the near-term outlook for real GDP growth is challenging due to the tight fiscal situation and existing restrictions on economic activity, forecasts the report.
"Over the medium-term, prospects for a pick-up in growth are promising, including new mining projects coming on stream," reads the report.
The IMF also recommends the government restore the health of the fiscal and financial sectors, which are essential to the macroeconomic stability.
Medhane Tadesse (Prof.), an academic specialising in conflict management within the Horn of Africa, also believes that the government’s policy had a more significant impact on the economy than the international sanctions.
“The policies were not targeted at attracting foreign investment,” said Medhane, but “rather restricted economic activity.”
To ensure macroeconomic stability, the IMF recommends that the government implement broader economic reforms to help deliver inclusive development.
PUBLISHED ON
May 25,2019 [ VOL
20 , NO
995]
Fortune News | Oct 23,2021
Commentaries | Nov 27,2018
Agenda | Feb 22,2020
Radar | Oct 16,2021
Fortune News | Dec 19,2021
Dec 24 , 2022
Biniam Mikru heads the department of cabinet affairs under Mayor Adanech Abiebie. But...
Jul 2 , 2022 . By RUTH TAYE
On a rainy afternoon last week, a coffee processing facility in the capital's Akaki-Qality District was abuzz with activ...
Nov 27 , 2021
Against my will, I have witnessed the most terrible defeat of reason and the most sa...
Nov 13 , 2021
Plans and reality do not always gel. They rarely do in a fast-moving world. Every act...
May 27 , 2023
Tauted as a somnolent giant, Ethiopia's financial scene now stirs, roused by favourab...
May 20 , 2023
The pungent irony wafting from Pretoria last week was hard to miss. Cyril Ramaphosa,...
May 13 , 2023
In March this year, Kamala Harris, the United States Vice President, visited Ghana, T...
May 6 , 2023
The history of the Ethiopian labour movement dates back to the 1940s, marked by perio...
Loading your updates...