IMF urges Gov’t to boost saving, contain inflation

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The International Monetary Fund (IMF) senior official urges the Ethiopian government

to boost savings and curb the cost of living that soared in recent months. “Ethiopia still faces significant challenges in particular containing still-high inflation, raising savings and meeting enormous investment needs,” said Naoyuki Shinohara, IMF Deputy Managing Director, in a statement issued after meeting senior officials including Prime Minister Meles Zenawi. Shinohara advises the government to continue reforms to mobilize resources and savings which he said are needed ‘to achieve high investment and sustainable growth in order to reduce poverty’. The country’s annual inflation eased in January to 32 percent from 35.9 percent in earlier month, according to the Central Statistical Agency of Ethiopia in February 2012. Meanwhile, the government was able to collect 35.1 billion birr in revenues during the first six months of the fiscal year that started on July 8, 2011. The performance is reported as above 40 percent from last year’s similar period; this means the federal government collected 10.2 billion birr more in revenues. Shinohara, who also met the Governor of the National Bank of Ethiopia, Teklewold Atnafu, and the Minister of Finance and Economic Development, Sufian Ahmed, in a visit held from March 1 to 3, said the outcomes are results of latest reforms undertaken by the government and they need to be sustained. “The Ethiopian authorities have implemented a base money nominal anchor and important tax administration reforms. These measures have started bearing fruit as inflation is progressively declining in recent months and fiscal revenues are on the rise. But more needs to be done,” said Shinohara in a statement. The IMF mission dispatched last year had disputed latest growth economic forecasts. The mission forecasted for 2010/11 a 7.5 percent growth against a government official estimate of 11.4 percent. For the current 2011/12, it saw a slower growth, at about 6 percent. Reporting to parliament in mid February, Prime Minister Meles said all the data about the 2010/11 economic performance are in and they back the government’s forecasts. “Earlier in the budget year we reached at a certain growth figure and our economy has registered an 11.4 percent growth [in 2010/11],” Meles told the House. “In this current fiscal year, already half way through, we would similarly register another double digit growth”.