Ethiopia Expects Robust 7.9 Percent Economic Growth this EFY

Addis Ababa, February 6/2024 (ENA) Ethiopia expects 7.9 percent economic growth this Ethiopian fiscal year, one of the fastest in the world, PM Abiy said today.

During the 14th regular session of the House of People's Representatives (HPR), the premier  responded to queries from members of parliament (MPs).

In his remarks, he raised the following key points.

With regard to tax collection, he said that the revenue collected in the first six months of the  fiscal year amounted to 265 billion birr, achieving 98 percent of the targeted 270 billion birr. This represents a 17 percent increase when compared to the same period last year.

However, Prime Minister Abiy acknowledged the need for further improvement, citing countries like Morocco and neighboring nations that collect higher percentages of their tax-to-GDP ratio.

He further underscored the significance of tax collection for promoting adequate development in the country, calling for necessary reforms to increase the tax revenue.

The PM urged Ethiopians to be aware that taxes are not being paid at a sufficient level, requesting their cooperation in this regard. He highlighted the relatively low tax-to-GDP ratio, emphasizing the need for a higher contribution from the population.

Speaking about export and import trends, he stated that the country earned 10.7 billion USD  from goods and services, with an earning of 4.5 billion in the first half of this year.

In terms of import, Ethiopia imported goods worth 17 billion USD last year, while this year's import amounted to 7.5 USD in the first five months.

With respect to foreign investment, Prime Minister Abiy highlighted Ethiopia's success in attracting foreign investment.

According to him, 3.4 billion USD worth investment was secured last year. 

This year,  he added that 1.5 million jobs were created within five months. 

Inflation is a result of various economic challenges, primarily stemming from insufficient domestic production. However, the PM noted a slight decrease in inflation from 30 to 28 percent this year.

The government's strategy to combat inflation involves boosting production, he stated, adding that successful outcomes have been registered in wheat and rice harvesting.

The premier pointed out the significant reduction in spending on wheat by saving over 700 billion Birr annually.

As regards debt, he emphasized that the government's stand is to avoid taking commercial loan. The government has not taken commercial loan during the past five years.

On the other hand, it has paid 9.9 billion USD in the stated period.

In conclusion, the premier expressed his determination to continue driving tangible change in Ethiopia. He pledged to strengthen the ongoing efforts and initiatives aimed at fostering economic growth, job creation, and reducing inflation.

Overall, Prime Minister Abiy Ahmed's address to the parliament highlighted Ethiopia's positive economic trajectory, emphasizing the need for increased tax collection, promoting exports, attracting foreign investment, and improving domestic production to sustain the nation's growth and development.

In recent months, Ethiopia has witnessed a substantial increase in deposits, standing at a total deposit of an impressive 1.3 trillion Birr. Although this growth in deposits has an impact on inflation by reducing the money supply, the effect has been relatively minimal, with little overall consequence.

Turning to loans, over 170 billion Birr was given on loan in the past six months, with a notable shift in distribution. Some 83 percent of this was taken by the private sector — a significant change when compared to the previous years when the government received 70 percent of the loans. This shift signifies a significant transformation in the lending landscape, empowering private enterprises and fostering economic diversification.

The stability and resilience of Ethiopia's banking sector played a crucial role in navigating through challenging times. The Commercial Bank of Ethiopia and Development Bank of Ethiopia, which were on the verge of collapse, were rescued to ensure their continued operation. The successful intervention in safeguarding these financial institutions has contributed to the overall stability of the economy.