Ethiopia’s economy seen slowing in 2011/12 – IMF

June 1st, 2011 Print Print Email Email

ADDIS ABABA, June 1 (Reuters) – Ethiopia’s economic growth will slow to about 6 percent in the 2011/12 fiscal year due to high inflation, restrictions on private bank lending and a trickier business environment, the International Monetary Fund said.

“The principal macroeconomic challenge is surging inflation. While this partly reflects rising international commodity prices, excessive monetary growth has been the principal cause,” the IMF said in a statement late on Tuesday.

The Washington-based body projects growth of 7.5 percent this fiscal year, below official estimates of 11.4 percent.

Ethiopia’s year-on-year inflation rate surged for a second straight month to 29.5 percent in April, from 25.0 percent a month earlier. [ID:nLDE749104]

IMF said Ethiopia’s budget saw a domestic financial surplus in the first half of 2010/11, but there was a significant recourse to central bank financing as the Treasury bill market collapsed, reflecting high negative interest rates.

The Horn of Africa country needed to provide room for the private sector to flourish and maintain a low risk of debt distress, IMF said.

“Going forward, the authorities are encouraged to reinforce financial sector supervision, continue implementation of the tax and customs reform plans, strengthen debt management, as well as efforts to improve the national accounts statistics,” IMF said

  1. Mele
    | #1

    The funny thing is tommnrow they wll say it growth @4 percent and make woyane happey.Whatever the number is mylife is inadam place b.C of high inflation.

  2. Woyane looters!
    | #2

    Well, duh! What else can we expect from TPLF 20 years of power abuse, robbery? Meles and his cronies have gotten filthy rich by robbing eighty million Ethiopians, depositing the Aid many in their private account in various banks around the world that is intended to feed starving Ethiopians and to improve the lives of poor Ethiopians. And most of all Meles and his dogs have been making money by literally selling the country to foreigners. TPLF have been demoralizing, intimidating, incarcerating and killing Ethiopian people since they came to power and this news that Ethiopia is broke is not a bit surprising.

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