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Returning to the House of Peoples’ Representatives to which he reported a gloomier economic performance in mid February, Prime Minister Meles Zenawi on Tuesday admitted that inflation may not slow to single digits by July, as he first predicted.
Responding to questions raised by MPs, Meles addressed a number of issues including the latest domestic controversies such as teachers’ “small salary raise” and Amahra nationals “forced out of the Southern region”.
Meles said discontent of some teachers that closed some schools after they held a strike is ‘a misunderstanding’ on a larger part. But he also accused some outlawed parties of trying to incite public disorder by capitalizing on the dispute. He insisted the government only introduced the new scale to make the teachers’ hierarchal progress be in line with the rest of the civil servants.
“There was no request for a salary increment and there was no decision to increase salary for teachers. Teachers’ salary will be adjusted when salaries of the entire civil servants are adjusted; there is no reason why the teachers’ case has to be treated differently,” Meles told MPs.
Amahara nationals who activists say were targeted and forced to leave their homes after settling in the Southern region were illegal occupiers who destroyed forestry areas, according to the PM who denounced the claims as “irresponsible”.
The PM also discussed Eritrea against which the army attacked in March in the first operation since the 2000 conflict which marked the end of bloody border related war.
Number one agenda
Branding inflation the public’s pressing, number one agenda; the federal government is doing its very best to mitigate the rising cost of living, Meles told lawmakers at Tuesday’s parliament session.
Meles went to explain the impacts of currently high global fuel price exports and Asian economies growing consumption of mineral and agricultural products. This represents the leading cause for inflationary pressure coming from abroad onto local markets, Meles said.
Domestically he said excess money supply triggered rampant inflation to which Meles said the feds tightened their grip by employing austerity measures and narrowing borrowing by the government. He said the federal government has not yet conducted any borrowing since July, 8 when the current fiscal year embarked.
The last time Meles appeared in the House, in mid February, he touted the economy as progressing well because it registered double digits last year and was in line to perform the same this fiscal year entering its last quarter. At that time Meles said inflation would slow to single digits when the fiscal year ends by July, 7.
The government remains unable to hold inflation to single digits for more than a year as promised in July 2010 when he launched the five year economic Growth and Transformation Plan (GTP) with massive public spending.
Senior officials including the National Bank governor and the Finance and Economic Development Minister however appeared content with a five month consistent trend of slowing prices that eased pressure on urban dwellers hard hit by rampant inflation.
The trend was however interrupted in February as prices once again soared.
Meles blamed irregularities on the seasonal rain, Belg, he said has triggered inflationary expectations on farmers and wholesalers. He further noted that the government flooded the market with grain imports to convince the market otherwise.
March’s rerouted a trend of slowing prices. The annual inflation rate slowed to an estimated 32.5 percent in March from 36.3 percent in February, the Central Statistical Agency (CSA) reported earlier this week in its monthly Consumer Price Index.
The drop is mainly due to slowing food prices that improved by more than six points. In March food inflation dropped to 40.9 percent from 47.4 percent a month earlier. Non food items also slowed to 20.4 percent during March, from 21.5 percent in February, the CSA reported.
Despite the latest gains Meles says they are unlikely to result in attainment of the government goal to contain inflation to single digits.
“Despite our earlier expectations it is unlikely inflation will be in single digits by the end of the budget year. It may take until September, November to do so,” Meles said.
To ease shortage of some vital commodities, Meles said state firms have imported eight million quintals of wheat and sugar and edible oil sufficient to meet local demand. He accused whole sellers of forming monopolies and causing problems with distributing commodities. He said they are inviting foreign firms to join the local market; amending stipulations that ban foreign firms from participating in the wholesale business in Ethiopia.
Eritrea – trying anything that works
During the parliament session when he answered to various questions from lawmakers, mostly from his ruling party and affiliated groups, Meles downplayed the possibility of a full scale war with neighboring Eritrea.
The PM said Eritrea lacks capacity to respond to Ethiopia’s latest attacks with a full scale war though he said the intention is likely to be there in Asmara.
Last month, Ethiopia announced that their army destroyed three military camps over 10 miles deep in Eritrean territory to respond to attacks from Eritrean backed militants’ attacks including one that killed five European tourists in January.
Meles also accused Eritrea of abducting over 100 Ethiopian youth engaged in gold mining in northwestern border areas.
“It has become the modus operandi of Ethiopia to blame everything on Eritrea,” Girma Asmerom, Eritrea’s ambassador to the African Union, told a foreign media denying Meles’ claims. “They think by lying and lying the lies may be perceived to be true.”
Meles said the March retaliation is just one part of the efforts his government is employing to solve disputes with Asmara. He told lawmakers that his government will extensively work with regional and international organizations to pressure the Eritrean regime to resort to working out disputes peacefully and negotiation.
Meles said his government is extending help to people fleeing from Eritrea, even accepting refugees seeking Eritreans in Egypt who were to be deported back to Asmara by authorities there.
Meles said while he doesn’t see Asmara possessing the capacity to respond to Ethiopia’s recent military offense by launching a full scale war, he says it is unlikely that they will stop destabilizing the region and Ethiopia any time soon.
Somalia success
Ethiopian troops currently fighting Al Qaeda-linked militants in neighboring Somalia will soon return to their home, said Meles.
Meles says areas currently controlled by Ethiopian forces will be handed over to neighboring countries’ peace keeping missions.
Ethiopian troops launched an offensive to wipe out Al Qaeda-linked Shebab insurgents in Central and South Western Somalia areas.
Meles said Ethiopian troops fighting alongside the Transitional Federal Government of Somalia have accomplished “very good results” in their offensive against the insurgents.
“The aim of our involvement was to aide the Transitional Government and help weaken Shebab insurgents. And it has been successful,” Meles told parliament which some opposition politicians said should have been the one to authorize the mission.
Meles added that Ethiopian forces were mostly met with little resistance from Al-Shebab fighters who he accused of trying to terrorize Somalians after being defeated in battlefields.
Meles explained that Ethiopian forces in South Western Somalia would be replaced by a peace keeping mission composed from Burundi, Uganda, and Kenya. He also said Djibouti’s forces in Mogadishu are conducting preparations to replace Ethiopian troops in some Central Somalia areas.