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Finance Ministry secures USD 25 million loan
The Ministry of Finance and Economic Development (MoFED) signed two agreements with the Arab Bank for Economic Development in Africa (BADEA), the Saudi Fund for Development (SFD) of the Royal Kingdom of Saudi Arabia (KSA). The two agreements involve a USD 25 million loan and double-taxation avoidance agreement.
Sufian Ahmed, Minister of Finance and Economic Development (MoFED), noted that the government of Ethiopia is implementing the third generation strategy, namely the Growth and Transformation Plan (GTP), which recognizes infrastructure development as one of its major strategic pillars.
According to the minister, BADEA and SFD have been supporting the government’s developmental activities focusing on sectors which are having positive impacts on sustainable growth and reducing poverty. He said the agreement he signed on February 28, at a ceremony held at the Sheraton Addis with his counterpart His Excellency Dr. Ibrahim bin Abdulaziz Al Assaf, Minister of Finance of the Royal Kingdom of Saudi Arabia and Chairman of the Boards of Directors of BADEA and SFD, is part of the two countries’ commitment to implement a common strategy to develop infrastructure and support the social and economic development of Ethiopia.
As per the agreement, Ethiopia will secure USD 25 million loan. USD 10 million of the loan has been secured from BADEA while the rest will be acquired from SFD. Ethiopia has already secured USD 50 million for the rural electrification project in Eastern Ethiopia from the OPEC Fund for International Development, Sufian said.
The Minister notified journalists at the signing ceremony that the loan from this particular agreement is meant to finance the implementation of the rural electrification project, which aims to provide reliable electric power to rural areas near the towns of Gode and Kebridahar, located in the eastern part of the country. BADEA and FSD are co-financiers for this project. “Furthermore, it will support the government’s effort to achieve its target of improving the socio-economic development of the rural population,” the minister said. He appreciated SFD and BADEA, not only for their substantial support in the country’s development endeavors, but also for their leading role in bringing other development partners onboard to support such efforts.
Dr. Ibrahim attributed the loan agreement to the initiative launched by King Abdullah in June 2008 following the Energy Summit where he advocated “Energy for the Poor”. “From then onwards, we have been working with the relevant institutions, particularly BADEA and the OPEC Fund, the World Bank (WB) and the Islamic Development Bank (IDB), to help countries in their bid to provide electricity, especially to rural areas,” he said. Dr. Ibrahim assured Sufian that his country will continue to work with Ethiopia on priority areas for development.
Sufian and Dr. Ibrahim also signed another agreement avoiding double taxation between Ethiopia and Saudi Arabia to enhance foreign capital investment, domestic productivity, skill and technology transfer, trade and export investments, which would have immense bilateral benefits. This agreement will create a conducive investment and business environment and economic growth for both countries.
Dr. Ibrahim bin Abdulaziz Al Assaf, who is in Addis for the second time, is hopeful that the agreement on the avoidance of double taxation will particularly encourage the private sector to invest more in both countries. He also expressed his wish to sign another agreement on the promotion and protection of the investments of both countries. “It is not a secret that our private sector is indeed very interested in making more investments in your country and we hope that we, as the government, will place the right framework for such investments to take advantage of opportunities that your country is particularly offering,” he said. “We have exchanged views on how to move forward in regards to investment and trade and also development assistance.”
Sufian also concurred that this agreement is a significant achievement in the burgeoning economic relations between the two countries. “The implementation of this agreement brings concrete economic benefits by removing the barriers of double taxation and creating a conducive environment for investment and trade between Ethiopia and Saudi Arabia,” Sufian stated.