The US government via its prominent professionals at Harvard University is providing support on macroeconomic reform under the program called ‘Advancing Economic Diversification in Ethiopia’.
The US government has provided over USD 100 million in new resources directly focused on supporting Ethiopia’s reform agenda. The US has been supportive of steps Ethiopia has taken to reform policy.
The ‘Advancing Economic Diversification in Ethiopia’ initiative that will stay for three years was sponsored by USAID and launched on Friday August 23 at the ceremony held at Hyatt Regency Addis Ababa.
“The U.S. Embassy is deeply honored by the opportunity to facilitate such a partnership, through an extraordinary initiative led by some of the world’s foremost economic experts based at one of the world’s foremost higher education institutions, Harvard University,” Michael Raynor, US Ambassador to Ethiopia said at the launching ceremony.
The initiative is facilitated by Harvard University’s Center for International Development under the leadership of world-renowned Professor Ricardo Haussmann, whose profile indicated that he is Director of the Growth Lab at Harvard’s Center for International Development.
The Ambassador said that the accomplished team and proven methodologies under Haussmann’s leadership have an extraordinary record throughout the world of supporting countries’ efforts to identify promising areas of economic growth, to highlight constraints to such growth, and to devise strategies to address both the opportunities and the challenges.
“Re-setting an economy of Ethiopia’s size and complexity is far from easy work,” he says, “But Ethiopia has much strength to build upon.”
According to the Ambassador first and foremost, it includes an exceptionally accomplished team of economic leaders and experts to drive this transformation. He said that even though the country registered positive economic and social growth recently, these gains were made at the cost of incurring significant external debt, and without commensurate progress in job-creation or private sector investment.
The government of Ethiopia is working to undertake structural changes in its macroeconomic arena and it has expressed it is working on homegrown policies to improve the economy.
Yinager Dessie, Governor of National Bank of Ethiopia (NBE), said the initiative is expected to contribute to the policy dialogue and to craft plausible professional recommendations for the new economic reform program, which the country started to implement very recently.
“This economic reform focuses mainly on monetary and fiscal policy stability, structural and sectoral transformation, growth, job creation and poverty reduction,” he said at the ceremony.
He went on to say that even though the economy has grown for 16 years it has also seen some macroeconomic imbalance such as poor export performance and tax collection that needs to be rectified within the coming years.
“We believe our economic reform agenda, which is a homegrown program, will contribute to macroeconomic stability and growth,” he added.
He expressed his hope that the US government initiative will support the implementation of the Ethiopian economic reform initiative.
Yinager told reporters that the initiative started when Ethiopia asked for more help to strengthen its economy.
US to support macroeconomic reform
Audit malpractice causes funding revocation
The Council of Ministers has cancelled the audit gap of selected federal public offices. The Office of the Federal Auditor General (OFAG) annually reported billions of birr of uncollected revenue, receivables or unsettled debts.
According to the Ministry of Finance’s annual report (MoF), the government has annulled 290 million birr in receivables mentioned in OFAG’s annual audit report as discrepancies observed since 2005. The money revoked by the council covers 18 public offices.
According to Haji Ibsa, Public Relations Head of MoF, based on a mandate from the Council of Ministers they also cancelled 119.3 million birr from 42 public offices. The Ministry revoked a total of 395 million birr in receivables from 60 offices.
Haji said most of the cancelations came about because of deviations between what was seen in annual audit reports from OFAG and what actually existed.
Higher education institutions had the most audit problems. “From the total 60 offices more than 60 percent are higher education institutions,” he explained. Most of the issues revolved around unexplained expenses such as buying a coffin for a dead student that was not included on the expenditure list. Instead that money went to other items.
Haji said the government has improved the expenditure directive of unlisted expenses observed in universities and diplomatic missions which are the other major public offices with audit discrepancies.
According to Haji, the Council of Ministers has given a mandate to MoF to revoke from 10,000 to one million birr.
Public offices shall revoke 10,000 birr based on their perogative and 50,000 birr via the consultation of MoF.
In a related development MoF has disclosed the country’s debt from local and foreign sources, while the report did not include the debt secured by Ethiopian Airlines and Ethio Telecom, both are secured loans without a government guaranty.
The government debt has reached USD 28.7 billion. Out of this amount, USD 12.7 billion from is from local sources or 47.5 percent and USD 15.99 billion is from external sources.
The government received USD 2.8 billion in non-concessional and concessional loans in the 2018/19 budget year. This is down from USD 3.5 billion in the 2017/18 budget year. Haji said the reduction shows the government’s strict procedures on accessing loans.
The country is stressed out from debt because they have recently received a lot of money for some finalized and under construction projects and some of the major loans are commercial loans mainly from China.
Regarding joint projects with the private sector the initial bid for Dicheto and Gaad Scaling Solar projects the government targeted to develop in a public private partnership (PPP) has opened on August 15.
In the bid 12 companies have been listed out of five that participated, according to Haji. The technical evaluation and financial evaluation will be finalized in August 28 and August 30. Haji explained the final result would be disclosed in September 2. The projects sites located at Afar and Somali regions are expected to generate 125MW each and estimated to cost USD 150 million each.
Under the PPP the government plans to finish eight solar projects, five hydro power and three road projects.
Cost sharing rate increases, repayments decline
The Ministry of Science and Higher Education is to increase the Higher Education cost sharing tuition fee from 15 to 30 percent in the next academic year. This decision comes as repayment rates are declining. The Ministry of Revenue collected 488 million birr from the cost sharing repayment scheme last fiscal year.
Ethiopia developed the cost sharing plan to serve as an alternative source of supplementing revenue in a bid to open more opportunities and make students responsible citizens and customers.
Cost-sharing in Ethiopia has been implemented since 2003 with the objectives of generating non-governmental revenue, expanding access, and improving equity and quality in higher education.
Students are expected to pay 15 percent of their tuition fee while the remaining 85 percent is sponsored by the government.
The revenue from cost sharing is less attractive as the country spends a huge amount of its budget on education. However, the scheme is believed to be a more attractive, simple and manageable alternative in the Ethiopian higher education landscape. It is also an attempt to ensure equitable access to students of any background, as there is no need to stipulate income of parents to determine the repayment amount.
Government financing of education has been generous. It is similar to the amount spent on transport and other infrastructure. Public spending on education in Ethiopia has increased by 70 percent in real terms between 2003/04 and 2011/12. In this period, education accounted for roughly 20 percent of total government spending.
According to the figure from the Ministry of Revenue, repayments from cost sharing increased over the last three years from 238 million in 2016/17, to 314 million birr in 2017/18 and 488-million-birr last year.
Calculating appropriate tuition fees and costs, giving every citizen a tax identification number (TIN) and decentralization and strengthening the tax collection and information system are important for successful implementation of cost sharing in Ethiopia
“The importance of consolidating the national ID scheme is a wasy to trace who works where in order to collect or deduct the payment”, said Bahiru Awel, Revenue Administration Director at the Ministry of Revenue.
Lack of awareness by private organization employers to deduct 10 percent from the gross salary and pay it back to the tax collecting ministry after a six month grace period, lack of central data system to trace where someone is working, and the low amount of job opportunities are some of the challenges when it comes to collecting the educational revenue.
Surprisingly, the Ministry of Science and Higher Education has not organized data on how many graduates repay their cost sharing except data on the disciplines that are calculated in service years.
“Graduates who work in government offices and those who need their original documents pay the most as the experience shows,” Bahiru adds. The minister has decentralized the collection mechanism to make the program more accessible.
REFLECTION ON ABSURDITIES
Whichever way one tries to look at things, one encounters, rather consistently, gross absurdities everywhere. These absurdities, unseen and unheard, at least since reason and rationality were made the guiding lights of collective human existence, have become frightfully dangerous. To be frank, the current absurdities border the realm of lunacy! What is even more disturbing is the fact that the majority of the global sheeple (human mass) still remains oblivious to these comprehensive maladies. It is now clear that dominant interests of the world order have gradually and meticulously installed numerous absurdities as the organizing principles of late modernity!
At this point in time inquiring minds are forced to look back and reflect on the overall human experience, particularly as they pertain to those eras when collective sanity was considered a blessing, rather than a bad omen to be avoided by any means! We believe this reminiscing exercise should include, amongst other things, the critical transformative phases when humans managed to subdue the uncompromising natural challenges of the planet. Drawing lessons from such ‘life and death’ experiences might shed some light on the current conundrum. After all, civilizations are stages of accomplishments that are borne from facing and overcoming adversities, be they natural or manmade! At this juncture, it is worth scrutinizing our current existence that is consciously undermining the resolve to enshrine sanity across the world. Is the existing generalized level of comfort/convenience, at least within the confines of the human universe, the culprit behind the numbing of the masses? It seems the relatively comfortable existence that became possible, mostly due to the availability of cheap/convenient energy, namely fossil fuel, has softened both the mind and flesh of modern humanity, to its peril!
Looking at our collective situation from a different perspective yields a disturbing scenario. One would think the comfort level achieved by humanity would pacify the ‘struggle for existence’, at least within the family of the dominant species. The actual reality is, unfortunately, much gloomier than that. Even in the best of times, the preoccupation of elites/leaders of organized societies seem to be the aggressive manipulation of everything so that all benefits accrue to the canny few. It seems the teaching of the mahatma has yet to sink in the psyche of entrenched interests. ‘There is enough for everybody’s need, but not enough for everybody’s greed’, Gandhi. By and large, humanity’s creative capacity has been captured by the psychopaths/sociopaths of our modern world system. Since, enslaved minds do not have much of a leeway when it comes to forging new modes of existence, despite immense innate capacity, humanity is made to suffer unnecessarily. The lunatic system or the senile system, to use Samir Amin’s phrasing, is on track to completely destroy life and life support systems of the planet, while massive capacity with a potential to rectify the situation is rendered useless and idle! Late modernity has demoted critical thinking to allow space for mediocrity and stupidity to organize society, resulting in a generalized zombie-fied existence!
In the arena of modern economics/business, the situation is truly astounding. Companies that destroy capital, not only financial, are regarded as leaders in their respective sectors. Here again is Bill Bonner, a forthright and credible thinker, always trying to clarify the stupidly mystified nonsense of our world system. See his article next column. As usual, Charles Smith also has something to say about the lunatic system. See his article on page 38. We admit, relentlessly debunking the absurd narratives of the existing sick order is not for the faint hearted or light headed. Caitlin Johnstone, John White head, Adam Taggart, James Kunstler are amongst the foremost critics of the system. See the article on page 33. There aren’t many critically minded individuals who are willing to labor so that enlightenment can come to the dormant sheeple of our planet. We salute them all! To contrast the above writings with the ongoing lunacy of the establishment, we have added a recent political pronouncement of a one Mr. President of the western world. Besides showing the perverted reality of their make-believe world, it also demonstrates their usual political flip-flops. Guess who said the following? Hint; it is not an extract from Vladimir Putin’s ground breaking Munich speech (2007)!
“I would like to say that today the world is living through a historical moment; the multilateral approach is often criticized, and we should think about ways to rebuild this world and this order. This means we should look for new cooperation mechanisms that will be useful to all of us. In this case, in this context, our bilateral relations as well as relations between Russia and the European Union play a key and determinative role. I am thinking about everything that has happened over the past few decades, what has managed to drive us apart. I know that Russia is a European country in its heart of hearts. And we believe in a Europe that spreads from Lisbon to Vladivostok. The main problem is not Russia but instead the United States. With that same breath this president continued: “That readmitting Russia to the G8 would be a ‘strategic error’ and a sign of ‘weakness,’ unless the situation in Ukraine was resolved first”. President Macron of France.
Here is another clear message to us all, especially to our pompous ‘useful idiots’. “Most people like to think of themselves as occupying an ideological middle-ground, just because ‘I’m normal and you’re a freak’ is an egoically comfortable position. In reality, most of these people belong to a violent extremist ideology of endless war and corporate kleptocracy.” Caitlin Johnstone. Good Day!
