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Published On: Wed, May 7th, 2014

Ethiopia:Prime Minister Hailemariam encouraged by sustained growth

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During the 26th Regular Session in the 4th year of this Parliament, Prime Minister Hailemariam presented the nine months performance report of the Government to the House of Peoples’ Representatives for the current fiscal year, on Thursday last week (April 24). The Prime Minister spoke of the country’s social and political developments and its overall continued growth, as well as noting some of the shortc omings registered in export activity.

The Prime Minister indicated that Ethiopia has enjoyed smooth bilateral and multilateral relations in this period with all neighboring countries, with the exception of Eritrea. He highlighted the Special Status Agreement with Kenya. This had been signed in November 2012 and had now been ratified by the Ethiopian parliament. It is expected to strengthen commercial ties between the two countries.

Concerning relations with Somalia and South Sudan, Prime Minister Hailemariam noted that Ethiopia was playing an important role in helping to stabilize both countries, both through the auspices of IGAD and bilaterally. In Somalia, Ethiopian forces under AMISOM were involved in operations to weaken Al-Shabaab and to provide support for the Federal Government of Somalia. The Prime Minister said Ethiopia and Somalia had also signed a military cooperation agreement to promote collaboration in security, business and information gathering. As for South Sudan, the Prime Minister said that as Chair of IGAD, Ethiopia was actively engaged in the on-going current peace talk process in order to try to bring a quick end to the fighting, encourage the implementation of the ceasefire agreement, and bring about a peaceful and durable solution to the current crisis. The Prime Minister stated that Ethiopia maintains strategic partnerships with several countries in Asia, Europe, America and the Middle East, and added that as Chair of the African Union in 2013 Ethiopia had been the voice of Africa and defended Africa’s interests in several multilateral fora.

Regarding the Nile issue, Prime Minister Hailemariam called on Egypt to return to the tripartite dialogue with Ethiopia and Sudan to implement the recommendations of the International Panel of Experts on the 8

construction of the Grand Ethiopian Renaissance Dam (GERD). He said the Government was working hard to convince the Egyptian authorities “to avoid unnecessary campaigns against the dam” He said Egypt should return to the tripartite discussions. Following deadlock in the talks in January, Egypt has reportedly said it would internationalize the issue and take the case to the United Nations Security Council. The Prime Minister said the Government was ready to respond to this.

The Prime Minister noted that Ethiopia was working closely with the other Nile Basin countries for equitable utilization of the river. He pointed out that Sudan, the immediate downstream country, was backing what will become Africa’s biggest hydroelectric dam and said the Renaissance Dam had cemented their strategic partnership. The recent Joint Sudanese-Ethiopian Higher Committee (JSEHC) meeting held in Khartoum had witnessed the signing of 13 cooperation agreements between the two countries and this, the Prime Minister said, had taken the relationship with the Sudan to a higher strategic level. The Prime Minister reminded the House of Representatives that six of the Nile Basin countries, Ethiopia, Rwanda, Kenya, Uganda, Tanzania and Burundi had signed the Cooperative Framework Agreement, and Ethiopia and Rwanda have ratified the Agreement. The Prime Minister said Kenya, Uganda and Burundi were expected to follow suit “soon”. He said the Government was encouraging Tanzania to ratify the Agreement and expected South Sudan and the Democratic Republic of Congo to join the CFA.

Turning to the overall economic performance, Prime Minister Hailemariam declared that Ethiopia has registered 10% real GDP growth, slightly less than the targeted 11% set by the Government. The Prime Minister said that his government was still satisfied “by the country’s sustained growth” despite some shortcomings of the economy affected by a reduction in export performance. According to the report, the manufacturing sector registered an overall increase of 11.4% over the previous nine months, with leather and leather products and textile and clothing achieving 12% and 14% growth, respectively.

During the past nine months of the fiscal year, agricultural exports however had only recorded a growth of 9%, the Prime Minister said as they had been particularly affected by the decline in global coffee prices. Coffee, of course, is the long-time leading foreign export item and still takes the leading share of exports. However, Prime Minister Hailemariam pointed out that other agricultural exports, including oilseeds, pulses, floriculture and fruits and vegetables had shown growth of 58%, 11%, 7% and 1%, respectively. The Prime Minister said the export performance had also been affected by the fall in the global market of gold, another major export item. The Prime Minister said the continued fall in coffee and gold prices in the global market was paralleled by a continuing surge in the price of oil, which meant the import bill continued to increase. Despite these difficulties, the Prime Minister said “Looking at the overall growth we have, what we have so far achieved is satisfactory.” He added that to counter the impact of the global markets, the Government would intensify follow-up and support efforts over the remaining three months of the fiscal year. He said efforts were underway to improve the quantity and quality of the export of coffee and gold.

The Prime Minister said that as a result of the Government’s tight monetary policy, inflation had remained at 7.5 percent. The Government expects that the bumper harvest forecast this current fiscal year, coupled with price stabilization in the global market, will ensure single digit inflation for the current fiscal year as well. He stated that controlling inflation was, of course, a significant contribution towards ensuring a stable macro economy.

Detailing the progress of the country’s major infrastructure developments, the Prime Minister noted that over 31% of GERD construction had now been completed, and he said the dam would be able to start generating power in a limited capacity next year. He added that Gilgel Gibe III, which will be able to generate 1,870mw, is 84% complete and it will begin power generation during the next Ethiopian year (2014/15) as well. A number of other wind and hydro-electric power plants are also under construction and are going according to schedule, the Prime Minister added.

During the fiscal year, the Prime Minister noted that there had been massive community mobilization in development activities, including soil and water conservation efforts, aimed to replenish denuded forest coverage. Much, he said, had been done in natural resource and irrigation development to realize sustainable agriculture production. He noted that the construction of the sugar development projects had been delayed due to financial constraints but the situation had now improved, he said, and further financing found. Seven of the projects would be able to go operational and begin production by the end of the plan period. 9

Referring to the Growth and Transformation Plan (GTP), Prime Minister Hailemariam underlined the need to speed up its implementation as it is a central element for boosting the less performing sectors. He particularly stressed the need to improve telecommunication services, energy supply and other basic service provisions during the remaining period of the plan which ends next year. Asked whether the current GTP performance is sufficient to meet the final plan targets, the Prime Minister said that many sectors were registering steady growth which would mean they would surpass the set goal; however there were some areas lagging behind the plan targets. He said more effort should be made to achieve those targets but equally, it was important to draw lessons from the problems and use these to input into the up-coming Growth and Transformation Plan II. He called for more concerted efforts to build up the capacity of governmental bodies to achieve the plan’s goals in the remaining period.

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