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Ethiopia’s Prime Minister Hailemariam Desalegn has promised that the Grand Ethiopian Renaissance Dam project will cause “no significant harm” to Egypt.
He said that his government will take into account benefits to both countries during negotiations.
He explained that his view is that the project could be a good thing for the biggest country in the Arab world. He also made clear that it is Ethiopia’s intention to continue with diplomatic efforts to reach agreement on the project with Egypt and Sudan.
At a press conference on Friday 28th June, the Prime Minister said the government will pursue options for joint development on the Nile River.
He also said he hopes the Egyptians will opt for peaceful discussions over the hydro-electric project being constructed in the basin of the Abay (Blue Nile) river in the Benshangul Gumuz region.
“We are including part of the recommendation and we demand to negotiate on the recommendations put by other experts for the realisation of the Grand Renaissance Dam project,” said Hailemariam, confirming that Ethiopia will implement the dam project.
According to the Prime Minister, Egypt’s government has also confirmed its intention to negotiate peacefully.
“The Egypt government and opposition may discuss to narrow their difference about their policy on the Nile River, but there is no difference on Ethiopian side,” he said, underlining his view that the project is an important one for unity in Ethiopia and in Egypt.
“Even though some small Ethiopian groups stand against the Ethiopian side, they are very small. 99.9% of the public supports the project,” he said.
“We will not go as imprudently as others have gone,” he said, responding to the hostile views expressed by Egyptian officials on live television, discussing the project and perceived threats to Egyptian water security.
He said Egyptians’ hostile attitude, broadcast on Egyptian television, is nothing new. “It is over a century old attitude and shall continue in the future, but this kind of thinking is not acceptable in the region and in Ethiopia. Things have changed here,” he said.
“We do not expect the Egyptian government to go with other alternatives than a serene manner,” the PM added. “But if the Egyptian government prefers aggression, it will be bad for them,” he warned.
“I have also explained to the Egyptian president about the situation. We have to work together to strengthen our relationship, rather than go other ways,” he continued.
The hydro electric dam is expected to cost 4.2 billion dollar and will generate 6,000mw electric power when it is completed.
The Prime Minister also used the press conference to discuss the economic situation in Ethiopia.
Discussing the question of dividend taxes due on retained earnings, he backed the statement given by Sufian Ahmed, Minister of Finance and Economic Development.
The Prime Minister said that the tax will be due only when the profit is dispersed among shareholders.
Talking about wider economic issues, he said that growth is tangible and that external observers have recognised that.
He said that public enterprises are not included in government budgets while they are profitable and using their own finance for investment.
“These enterprises are not included on consolidated budget. Consolidated budged is a budget developed on the bases of fiscal policy,” he explained about the understanding of budget deficit.
“The budget deficit that is under the fiscal policy and that did not include the public enterprises budget is not more than 2%,” he said.
Some analysts believe that the budget deficit is close to 18% and it will continue at that level during the coming fiscal year, which will start on 8th July, 2013.
The Prime Minister said he is confident that this deficit will not lead to significant inflation. He said that the government is continuing with infrastructure projects, while putting in place measures to control inflation.
Discussing the trade deficit, the Prime Minister described the export market as key to narrowing the gap. “The trade deficit is related to imports and exports and there is a big gap, but in future we have to expand the export market,” he said.
“To expand the export market, the country has to shift to the manufacturing products export from the current agricultural items,” he explained about the government strategy.
But on the past three years of the five year plan, the revenue earned from export trade is below the target, while the government projected an ambitious target for export earnings under the Growth and Transformation Plan.
For instance, in the past 11 months of the budget year, the country earned 2.8 billion USD from exports, lower than the projection for the 2012/13 fiscal year.
The government has planned to expand the manufacturing sector, mainly leather and textile export in the GTP, but it is below its target for doing this during the past three years.
According to Hailemariam, the birr depreciation is scheduled to reach five to seven per cent since the beginning of the GTP. “Based on that, our depreciation is not more than the stated amount and it will continue in this manner in the coming two years. For the coming fiscal year, the depreciation is expected to sit at six per cent,” he explained.
The Prime Minister also discussed the ongoing corruption investigation, saying that it has no political motive. He said that the ruling party has approved to tackle corruption during its ninth congress, held in March this year.
He noted government measures aimed at tackling corruption will continue.
He also said that economic growth this year will be back on track, after last year’s drop. He said this is down to agriculture production increasing during the last harvest season.
Agriculture growth in the last fiscal year was five per cent, but growth this year is already showing six per cent, following cereal production during the harvest season, he explained.