
Sponsored Contents | Sep 26,2021
December 29 , 2018
By Hintsa Andebrhan ( Hintsa Andebrhan is interested in politics and history. He can be reached at hintsa1974@gmail.com. )
It would be an understatement to say that Ethiopia’s economic and political situation has gotten worse over the years. But the latter has been far worse than the former. There is tension between the federal and regional governments. The rhetoric coming from most sides of the political rhetoric is ugly and sickening.
Most worryingly, the government is losing its grip over the legitimate exercise of force in the country, and innocent civilians are getting attacked in broad daylight owing to their ethnic persuasion.
Such sociopolitical tensions can persuade us into believing that the macroeconomic problems facing the nation should be put on the back burner. Double-digit inflation, low export performance, debt stress and the absence of a strong private sector do not seem that urgent given that citizens are beginning to feel less safe in their own country.
Indeed, the seriousness of the political malice this nation is facing makes it very hard for the incumbent to spend time on matters that are not directly related to averting the worst case scenario the combination of an uninformed public, a non-assertive security apparatus and egotistical political leaders can bring.
But there is no escaping the fact that all political problems, either partly or wholly, have their roots in economic shortcomings. It can be said that to all the political problems that face the country citizens should contribute their part to orient the country along a more stable path. The economic problems though can only be addressed by a government willing to learn from its past and reform accordingly.
This is because it is the EPRDF’s policies that have led to this sorry macroeconomic state. There may be a high gross domestic product growth rate, but there is enough worrying undulation in the macroeconomic fundamentals to show that the economy is unhealthy and requires stimulation in the form of progressive economic reforms.
The fundamental problems have been poor fiscal and monetary policies. High government spending and deficit financing over the years ensured that inflation picked up, the real rate of the Birr depreciated and investors lost confidence in the currency. This fueled the appetite of the black market, which then dilapidated the government’s foreign currency reserves.
Lax checks and balances between the different bodies of governments also made the possible positive impacts that could have been gained from government spending impossible to be fully realised. It left us with the waste of government resources, delays of projects and poor products.
This all severely impacted the private sector. It was crowded out by public enterprises in credit and foreign currency allocation, but that these ventures were never as profitable as they were promised meant businesses will continue to subsist in an environment that is inimical.
Fortunately, there are already some initiatives underway to improve the business environment with the view that a robust private sector will go a long way to helping the nation generate foreign currency, create employment opportunities and improve tax revenue.
This should be commended full-heartedly and the government edged on to push forward with reforms indispensable to a healthy economy. It should be able to liberalise industries closed to the private sector, take measures to improve the professionalism of the bureaucracy and invest to ensure linkages between industries.
The government at this time should also improve its regulatory capacity. It should be able to come up with new policies that are able to dissuade efforts to move capital away from the country while incentivising its entry into the country.
This could be by opening up the capital account, which will boost investor confidence about the state of the economy, and by printing new 50 Br and 100 Br notes to nip illegal stashing of wealth in the bud.
Prime Minister Abiy Ahmed (PhD) and his administration may be tasked with the mountainous task of keeping this country stable and peaceful, but it should not be forgotten that the economic paralysis is also worrying. It is not just a case of having to lubricate the economy for better performance but correcting the unhealthy distribution of wealth.
PUBLISHED ON
Dec 29,2018 [ VOL
19 , NO
974]
Sponsored Contents | Sep 26,2021
Fineline | Nov 30,2019
Editorial | Jan 11,2020
Verbatim | Nov 07,2020
Viewpoints | Jan 05,2019
Commentaries | Aug 17,2019
Commentaries | Aug 08,2020
Viewpoints | Jul 25,2020
My Opinion | Jun 26,2021
Fortune News | May 29,2021
Photo Gallery | 52125 Views | May 06,2019
Fortune News | 45511 Views | Jul 18,2020
Photo Gallery | 43803 Views | Apr 26,2019
In-Picture | 42131 Views | Dec 14,2019
November 27 , 2021
Against my will, I have witnessed the most terrible defeat of reason and the most sa...
November 13 , 2021
Plans and reality do not always gel. They rarely do in a fast-moving world. Every act...
October 16 , 2021 . By HAWI DADHI
Residing in a country with no capital market, an organised marketplace for trading se...
August 28 , 2021 . By HAWI DADHI
The streets of Addis Abeba are as varied as they are many, although too many of them have yet to be named. From the narrow alleyways of the...
May 21 , 2022
There was a great deal of handshaking and patting each other on the back at the Hyatt...
May 14 , 2022
Diana Yohannes is one of those actively engaging in social media platforms with her T...
May 7 , 2022
The Ethiopian Economic Association (EEA) recently proposed the formation of a macroec...
April 30 , 2022
There is no ambiguity in the UNDP's assessment of Ethiopia’s economic performance a...
May 21 , 2022 . By BERSABEH GEBRE
Efforts to form the country's first-ever capital market took a meaningful step last...
May 21 , 2022 . By TSION HAILEMICHAEL
Trade regulators have warned exporters to immediately ship oilseeds and cash crops...
Federal officials are moving forward with a belated initiative to form a regulatory...
May 21 , 2022 . By TSION HAILEMICHAEL
A consortium of agrochemical importers has pleaded with central bank authorities for...
Put your comments here