NBE Governor Says Poor Performances, Low Export Earnings Pose Threat to Economy

Addis Ababa   February 21/2019 Poor performances and downturn in export revenue have posed threat to the national economy, according to National Bank of Ethiopia (NBE).

The Governor of the National Bank of Ethiopia gave a press conference on the state of the Ethiopian economy yesterday.

NBE Governor Yinager Dessie said underperformance in GTP II since 2016 has resulted in cooling of the economy.

He noted that the annual growth rate of the GDP has accordingly fallen from 10 percent before 2016 to 7.7 percent after 2016.

The governor added that the overall economic performance was low, despite growth in infrastructure development, education and health.

The governor added that lower level of export earnings over the last 3 to 4 years has resulted in concomitant lower foreign exchange earnings during GTPII.

The country earned only 2.8 billion USD from export last Ethiopian fiscal year, far below the level of remittances in the same year.

Yinager noted that shortage in hard currency has prevented the regular debt repayment rate and affected negatively the smooth flow of projects which could have earned the nation viable foreign currency to maintain a regular growth.

The resultant effect of the whole situation is demonstrated by the fact that over 23 million citizens are still living under the global poverty line, while some 8 million citizens are still being supported through the food security program, he elaborated.

The governor reiterated that foreign financial aid, loan and remittances cannot buttress the economy, clearly showing that revenue from exports still remains a critical factor for the growth of the national economy.

Recurrent low levels of export earnings have prevented the country from addressing the fundamental socio-economic plan meant for the smooth development of the economy, according to Yinager.

The debt maturity period has further complicated the usage of foreign currency earnings.

Though the debt repayment schedule was prepared by taking into consideration the annual export earnings, failure in meeting the planned export earnings has caused stress in the national economic, the governor explained.

On the other hand, Yinager stated that the dwindling domestic revenue earnings dictate budget deficit and further need for loans.

The governor stressed the need to focus on export and particularly the agriculture sector that still remains a pace-setter in earning foreign currency for the country.

He also underscored the need to upscale productivity in the manufacturing and mining sectors.

The governor further stressed on the need for effective utilization of budget allocated for the public sector.

Yinager said accelerating the privatization process as part of the economic reform will help to increase the foreign currency earnings and promote efficient debt repayment.