Ethiopia predicts 11 per cent economic growth for 2012
By Prince Ofori-Atta
Ethiopian Prime Minister, Meles Zenawi has forecast that the economy will grow by 11 per cent, although this will be blighted by a high inflation rate expected to average 32 percent.
Presenting his six month report to parliament Wednesday, Zenawi said the country had grown by 11.4 per cent and for the fifth year in a row, Ethiopia’s growth would be above the 10 per cent target set by the government.
However, the World Bank and the International Monetary Fund (IMF) have been less optimistic of the Horn of Africa country’s growth forecast, projecting that growth would be around 7 per cent.
The IMF warned that the high inflation rate was likely to impact negatively on growth prospects. Meles told legislators that the government was doing its best to bring the current inflation rate to a single digit figure at year end. “The government has totally stopped borrowing money from the national bank, which was among others things aggravating inflation,” he said. Meles said the country’s industry sector, which he expects to be the backbone of the economy, had shown great improvement, registering 12.5 percent growth.
He indicated that the government tax collection potential is on the rise. Even Somalia is collecting more tax than us In the past six months the government was able to collect around US$2 billion from various taxes and non-tax services showing around 40 percent growth compared to previous years. Meles, however, said the country’s tax collection was still below African standards, which stand at 18 percent. “Even Somalia is collecting more tax than us. Now we approach 10 percent of tax collection, which is still low compared to others countries on the continent,” he said.
The prime minister also indicated that during the period under review there was a budget deficit of more than US$400 million, which many say will remain the challenge for the government in curbing rampant inflation. Meles indicated that his government was undertaking studies to invite more foreign investors into the country in various fields. However, the premier did not elaborate to which sectors the government was inviting foreign investors. “We are currently assessing the advantages and disadvantages of the sectors which we are going to let foreign investors in,” said Meles.
Foreign banks, insurance firms and telecommunication companies are barred from operating in Ethiopia. There are 14 banks in the country but experts warn that the country is under banked and there is need for 40 more financial institutions.
Source The Africa Report
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