Ethiopia: Interview With Ato Girma Seifu Maru On Walta Television Part Two
During her final daysin her working visit to Ethiopia, CeylaPazarbasioglu (PhD), vice president of the World Bank Group (WBG) for equitable growth, finance and institutions told The Reporter that the ongoing ambitious reforms in Ethiopia need to be “sequenced and carefully considered,” not to end up with unintended consequences.
Visiting Ethiopia since Wednesday, the vice president has met with Officials and paid visits to projects, the WBG has been supporting. Bole Lemi-II Industrial Park project, to which the Bank has availed USD 250 million, was one of her destinations.
One of the findings the Bank has published on its economic update report this year entails that despite the incentives and amiable provisions, exports of manufactured goods could not jump beyond 2.5 percent of the total export figures which are experiencing sharp declines in recent years.
Pazarbasioglu said further that, “it is a very good idea to do a few of the reforms and it is about the government’s understanding on what the barriers are for Foreign Direct Investments. What are the barriers for business development and how can they use the experiences of smaller and controlled environments and then use at the scale of the nation.”
From the lists of macroeconomic downturns, the shrinking performances of the export sector along with the high debt distress status of the country are some of the issues the WBG has been echoing for some time now. To curb such challenges, the government has announced some major reforms including privatizations. According to the vice president, the government, however, needs to carefully plan and implement these reforms.
Pazarbasioglu notedthe various reform measures the government is longing to embark up on. She mentioned how the government is looking to reform the financial sector, the tax regime, the private-public sector reforms and privatization. Furthermore, the WBG has expressed commitments to support major reforms, committing a budget financing program for the Government of Ethiopia.
In line with that notion, Pazarbasioglu suggested that the government needs to sequence those reform packages and learn from global experiences to tailor them in accordance to the country’s needs. “The country is not going to be changed overnight. But it is very impressive when one looks at the reform strategies articulated. The challenge will be implementation and we are ready to support it,” Pazarbasioglu said.
When asked whether the government should consider a gradual approach or a leap forward for quicker gains in the process of privatization? The vice president said that the approach “at the end of the day depends on the global economic backdrop.” In a world full of uncertainties and tensions: geopolitical as well as trade tensions; countries are affected by the decisions of investors and for that, the government of Ethiopia has to fine tune those reforms depending on the external environment.”
Before her departure, Pazarbasioglu attended the 7th series of economic update on Ethiopia: “poverty and household welfare in Ethiopia 2011-2016.” The economic update report finds that 80 percent of Ethiopians have a very low living standard on the basis of monetary values which is even lower than the status of peer countries.
BerheMekonnen, poverty economist with the WBG Ethiopia, while presenting the findings of the report said that Ethiopia has performed fairly low in reducing poverty in the past ten years despite its growth in double digits. The expert said that the severity of poverty remained unchanged in 15 years of progress. He added that the poorest of the population mostly referred to as “the bottom 15 percent” didnot benefit from the economic growth which portrayed Ethiopia as one of the fastest growing nation in the world.
Based on the two household consumption expenditure, surveys conducted twice in 2010/11 and 2015/16, the distribution patterns showed a higher degree of disparities mostly tilted to urban areas. The most consumption trends are concentrated to those who could afford, the report indicates.
In the macroeconomics part of the report, Nora Dihel, senior economist with the WBG, indicated that the government needs to cautiously consider a transparent approach in its State Owned Enterprises with regards to its fiscal and debt structure. “Transparency and cautious fiscal policyis required,” the senior economist suggested.