The Federal High Court 10th Criminal Bench granted further investigation time for police over Tesfaye Urge’s file. The suspect, who allegedly attempted to assassinate the Prime Minister, is being tried at the Federal First Instance Court.
After the last adjournment the police didn’t bring the suspect to this court as he appeared to be in another allegation in the high court where he will have to appear after 14 days, starting from last Monday.
Also, the same bench of the FHC adjourned the case of M/G Kinfe Dagnew until December 19, to grant police extra time for investigation. The investigation team presented various transactions suspected to be deceptions by the former CEO, Kinfe. The police also presented the case of a contract between the Alem Fitsum and the Corporation.
In addition, the bench entertained the case of Yared Zerihun, former Security Intelligence Office Deputy Head, and granted the 14 days of further investigation for police to be calculated since December 5. Yared was suspected of involvement in various human rights violation throughout the nation and allegedly abused his power.
The busy 10th criminal bench has approved the request of police to finalize its investigation over the case of M/G Kinfe Dagne’s brother, Essays Dagne and it has adjourned until the 20th of December. Kinfe was suspected of causing damage to the public by abusing power in allegedly awarding a tower construction deal to MeTEC, while he was working in Ethio-Telecom.
The same bench heard the case of TV show host, Fitsum Yeshitela, an adjourned the hearing to 23rd of December granting police additional time for investigation, rejecting the suspects’ bail right claim.

Tadesse Kiros Law Office (TK) in collaboration with the Baker McKenzie Law Firm, one of the top law firms in the world, organized a roundtable dialogue last week on the topic of Ethiopian and African power sectors. The discussion, which brought the Private and Public sector together, aimed to create a common ground between the stakeholders and building their capacity on the evolving power sector in the country.
The nation which is in the process of creating the Policy, Legal and Operational surfaces for partnerships between the Private and Public sector has become the center of attention for giant global companies. Last month the Public-Private Partnership Board approved 16 projects and 13 of them are in the renewable power sector.
Issues of potential opportunities and challenges were researched and presented by both sides, comparing the local reality with the global experiences. Participants also raised various issues and held conversations.
Jen Stolp, Partner at Baker McKenzie, presented the financial aspects of the sector compared with global experiences. Titled Funding-trends and challenges, she stressed the transition from the traditional project financing to the modern modalities of financing public projects. She also listed out the major issues in the project financing both from the lender’s side and the projects.
Focusing on the African Energy Projects: trends and lessons learned, Kieran Whyte presented various achievements and challenges faced by projects in Africa.
The Ethiopian Energy Sector: Legal and Regulatory Framework were researched and discussed by Shimeles Hailu, associate at Tadesse Kiros’. In session that went over the government structures and legal frameworks Shimeles elaborated about what the legislation and administration in Ethiopia would look like for the power sector, including the new PPP scheme.
Tadesse Kiros, founder of the office, indicated that the main aim of this roundtable discussion is to establish a close relationship between the stakeholders to establish power projects. He also stated that the sector is very young and needs to develop with expertise an active participation.
The Law office is also operating with limited powers.
“Our office has expertise in different legal specialties but as the law firm arrangement is not allowed here we were not able to perform up to our potential,” Tadesse told Capital. “We are working with law firms which are among the top five on the globe aiming to work with our common clients coming here in Ethiopia. But as the government still doesn’t allow us to be organized as a law firm we can’t specialize in one area or grow competently in the skyrocketing demand of the economy.”
He also stressed that as the economy is opening up and giant international companies are surfacing the need for more professional lawyers is necessary.
The Law office organized similar dialogues on the issues of the commercial laws, last October.
Participants from various government institutions including the Ministry of Finance, Ethiopian Electric Power, Ethiopian Electric Utility and Development Bank of Ethiopia were present.
The office which has been operational since 1996 has 20 experts.

The prominent Ethiopian hospitality brandKuriftu Resorts and Spas, has opened one of the biggest seaside restaurants in the heart of Djibouti city.
The company, which has become well known for its chain of recreation destinations in Ethiopia over the past ten years, has officially opened its luxury restaurant featuring global cuisine.
Tadios Getachew, the Ethiopian born diaspora who lived in the US and owner of Kuriftu Resorts and Spas, said that the eatery can accommodate 400 people as a restaurant or up to a thousand people as a cocktail reception spot.
The restaurant rests on 2000sqm and was inaugurated a week ago in the presence of top government officials in Djibouti. The facility is considered to be a big opportunity for expanding tourism in the east African nation and attracting more Ethiopian tourists or people who have visited Ethiopia.
“We are venturing out of Ethiopia because we want to be an African brand. We have been receiving many brands from all over the world but we have never been able to export our own Ethiopian brand to the rest of Africa or somewhere else before,” Tadios told Ethiopian journalists who visited the restaurant a few days before its official inaugural.
According to the owner this is the second venture for Kuriftu in Djibouti, the first one is on 65.3 hectares of land at Moucha Island, which is a 15 minute boat ride away from Djibouti’s capital. The project, which is under construction, includes a massive recreation facility on a beautiful natural white sand beach. It is a location where people can view whale sharks, dolphins and exotic fish. The company has received 653,000 square meters of land on the island, including 250,000 square meters of thick forest.
He said that the restaurant has consumed two million USD, while the resort investment is close to USD 7 million.
“Djibouti will benefit from this value added investment and Ethiopian tourism will benefit because blue water, white sand and sea food are rarely available for Ethiopian tourists, expats and Ethiopian residents but now they only have to fly 45 minutes to experience all this,” the owner of Kuriftu said.
“Tourism in Djibouti will also benefit from this because whatever Djibouti does not have Ethiopia can provide. Ethiopian, Kenyan and Djibouti airlines can package this as a destination to promote the region,” he added.
So far Kuriftu has 11 operational businesses that employ 3,000 people in Ethiopia. It is in the process of opening the largest water park in the country.
“We want to be a chain of resorts, spas and restaurants all over Africa,” he added.
Kuriftu Resorts Djibouti’s hospitality project will maintain the same standard and a similar style to Kuriftu Resorts in Ethiopia. One of the qualities of Kuriftu is the architectural design of shades in the resort.

IMF recommends further devaluation of Birr

Even though the tax to GDP ratio has gone down more than expected, the government is expected to introduce a new tax levy in addition to reforming the excise tax to boost the government revenue. The International Monetary Fund (IMF) has recommended another devaluation of the birr and forex market flexibility.
Since the beginning of the first Growth and Transformation Plan (GTP) the government has expressed its eagerness to expand the revenue from tax in line with the rate of the GDP. It has also show an improvement in the first GTP even though the rate is under the projection. At the heyday of tax collection in 2014/15, which was the end of GTP I, the revenue authority body which at the time was the Ethiopian Revenue and Customs Authority, collected 12.7 percent of the DGP. This is lower than peer economies and countries in the east Africa region.
However the tax collection has not risen in proportion to the growing GDP. For instance, in the 2016/17 budget year the tax collection stood at 11.6 percent of the GDP. According to the latest report of the IMF it has went down more in the previous fiscal year and is now 11.1 percent less than the preceding period, which is very far from the target of 17 percent at the end of the current GTP, which will end in the coming budget year. The IMF forecast indicated that in the current and the coming budget year the tax GDP ratio will stand at 11.2 and 11.3 percent which indicates that the government will never attain its target of over 17 percent in 2020. In its Article IV consultation the IMF usually recommends that expand its tax revenue to widen the public expenditure coverage from tax.
The latest IMF report, which is the final of preliminary reports issued in September this year, stated that Ethiopia has made progress in mobilizing domestic revenue since the mid-1990s, but still lags countries in the region and other low income countries (LICs). “The tax-to-GDP ratio rose from 8.6 percent in 2008/09 to 12.7 percent in 2014/15, but it has declined since then to 11.1 percent in 2017/18,” it said. In the past budget year the government has targeted collecting 200 billion birr, but the actual performance was actually ¼ of the target, which is a significant reduction compared with the recent trend in the tax collation and target achievement ratio.
“Ethiopia relies heavily on trade taxes, while direct and indirect taxes have underperformed. Direct and indirect tax revenue was 56 percent of total revenue in Ethiopia in 2016/17, below the 64 percent average for LICs. Trade tax revenue, at 26 percent of total, is substantially above peers, while non-tax revenue plays a small role in domestic revenue,” it added.
Ethiopia lags behind regional peers on VAT and CIT (corporate income tax) efficiency measures-a key reason for the low tax-to-GDP ratio, according to the IMF consultation report.
“On revenue mobilization, the authorities intend to redouble their efforts, with support from donors, including the Fund, to strengthen revenue administration and were also considering revenue-enhancing tax policy measures-such as excise reforms,” it added.
It has added that the government goal of addressing the decline in tax revenues through a comprehensive Tax Transformation Program (TTP) that has directly followed by the Prime Minister and undertaken a consultant and a task force under Ministry of Finance to improve the tax system and revenue via a browed tax system. The TTP focuses on taxpayer registration, e-filing and digitalized self-assessment, compliance risk management, tax arrears management, and federal regional tax coordination with assistance from the Fund and other development partners.
“Consistent with Fund advice, the authorities are conducting a cost-benefit analysis of existing tax expenditures with a view to their rationalization,” it said. In addition, the authorities could implement reforms in excises and introduce a property tax, thus generating additional fiscal space.
Currently the government has imposed from 10 to 100 percent in excises tax on 19 different types of products. However the property tax would be new for the country if it becomes effective. Source at Ministry of Finance told Capital that initially property tax has been studied by Ministry of Urban Development and Construction. “Because it is not the mandate of the urban development ministry we have now taken it to study under our jurisdiction,” a source, who is in the legal department at Ministry of Finance said.
The urban finance strategy of Ministry of Urban has been included the revenue collection from property in towns that is now revised by Ministry of Finance, according to sources.
Currently individuals are focused on buying houses, which are not taxed, they then invest their capital in other businesses. Property tax has targeted discouraging those who focus on expanding property ownership in addition to expanding government revenue, according to sources. Property taxation is common in other countries. For instance the majority of African states have a property tax system.
Monetary and financial sector policies recommendation
In its latest report IMF under its monetary and financial sector policies recommendation gives the usual suggestion for more devaluation, despite that the government applied a 15 percent devaluation on the birr against major hard currencies in October 2017.
IMF stated that the tighter fiscal and monetary policy stances, coupled with a more flexible exchange rate, would support external competitiveness. “The competitiveness boost from the October 2017 devaluation has since been largely eroded. The birr was kept constant relative to the US dollar while the latter appreciated against major currencies; and Ethiopia’s inflation differential relative to trading partners has stayed high,” the report explained. “As a result, staff assesses that the external position is weaker than medium-term fundamentals and desirable policy settings would imply, and the real effective exchange rate was overvalued by 12–18 percent as of September 2018 only a modest improvement since last year’s assessment,” it added. According to the IMF, more recently, the National Bank of Ethiopia (NBE) has resumed its previous policy of gradual nominal depreciation against the US dollar. It added that a more flexible exchange rate aimed at eliminating misalignments and building up reserves would help competitiveness and foster stability, while reducing foreign exchange shortages.
The report believed that a more flexible exchange rate policy aimed at reducing the real overvaluation of the birr, reducing foreign exchange shortages, and accumulating reserves would help to improve competitiveness.
The report stated that the more restrictive monetary base targets and public sector credit policies, including tighter NBE deficit financing, will help bring down inflation. “These policies need to be complemented by a more flexible exchange rate policy aimed at correcting the birr overvaluation, improving reserve coverage and reducing foreign exchange shortages, as well as by the development of financial instruments with market-based interest rates and other financial development measures, as discussed below,” it added.
The country debt has also grown compared with the past year by close to 4 percent. A year ago the debt ratio compared with GDP has stood at 57.2 percent, while in 2017/18 fiscal year it grew to 61 percent. From the total debt domestic debt has increased by one percent and stood at 28.8 percent. The external debt was 32.3 percent in 2017/18, and was 29.4 percent in 2016/17.
According to the government, due to the growing debt stress in the current 2018/19 budget year, no new projects will be allowed to rely on non-concessional financing, and ongoing projects will largely shift to concessional financing.
IMF stated that the Debt Sustainability Assessment (DSA) shows that Ethiopia remains at high risk of debt distress because of its small export base. Public and publicly-guaranteed external debt breaches the thresholds for the present value of debt-to-exports and debt service-to-exports in the baseline. Debt service payments are expected to increase in the coming years, as grace periods on non-concessional debt acquired in the past expire.
Regarding real GDP growth activity will be supported by continued growth in manufacturing and services, particularly expansion of air transportation, while construction may remain subdued due to restrictive public policies, according to the IMF.
Based on current policy settings, medium-term economic growth is envisaged to converge to around 7 percent, supported by rising FDI, continuing investment in infrastructure by the public sector, and rising productivity levels as export-oriented industries take root and start operations.
The IMF report forecasts that FDI and remittance growth are expected to resume as political uncertainties settle following the leadership transition. “External financing constraints will temporarily ease in 2018/19, owing also to the recent USD 1 billion deposit from the UAE and a USD 1.2 billion World Bank Development Policy Financing (DPF) operation. As a result, international reserves are expected to reach USD 3.4 billion (1.8 months of prospective imports) in June 2019 consistent with the authorities’ projections.
According to the report as of the end of the past fiscal year the country’s reserve stands at USD 2.8 billion of imports of goods and nonfactor services of only 1.6 months (the government stated that it was a 2.1 months) that supposed to be at least 3 months. In the 2016/17 fiscal year the reserve was USD 3.19 billion or importation for two months.
According to the IMF, foreign reserves have increased to USD 3.7 billion in September, following the receipt of a USD 1 billion deposit from the Abu Dhabi Fund for Development (ADFD) in NBE in July. However, foreign exchange shortages persist, as evidenced by the spread between the official and parallel market exchange rates and the long wait times for businesses to obtain foreign exchange.
In the monetary and finical sector policy the IMF stated that the NBE’s stance of containing reserve money growth to 13.3 percent in 2018/19 is a welcome step to bring inflation to target but will need to be complemented by other policy measures.
In recent years, the growth rates of reserve money and of broader credit and monetary aggregates have diverged. This signals that reserve money may be losing its effectiveness as a monetary policy instrument a natural transition as the financial system deepens and becomes more sophisticated. “Hence, the base money target needs to be complemented with policies to contain credit growth, especially to the broad public sector,” IMF recommended.
Beyond the immediate term, however, the NBE’s intention to develop market-based indirect monetary instruments will necessitate the creation of a market for government debt with market-determined interest rates, according to IMF.
It added that Ministry of Finance could issue specially designed marketable securities in gradually increasing volumes to finance the budget, which could be held and transacted by banks and other appropriate institutions.
In turn, the NBE would use interventions in this market to signal its interest rate stance, helping to better control broad money and credit growth. Issuance of these budget-financing securities would allow the gradual phasing out of NBE financing of the government.
Since the commencement IMF opposed the implementation of NBE bills that forced banks to buy 27 percent of every loan with a five year maturity and 5 percent interest rate, which was 3 percent before October 2017. In its latest report it has also recommended the reform of NBE bills in addition to discontinuing the funding of the policy bank, Development Bank of Ethiopia (DBE), the cash collected from private banks on NBE bills.
“These 5-year NBE bills must now be purchased by private commercial banks in an amount equivalent to 27 percent of gross credit extended, irrespective of the maturity of the loans-about 75 percent of these funds are then used to fund the DBE, whose NPL ratio has steadily increased to 39 percent,” it said. It said that NBE bills now represent 30–40 percent of private commercial banks’ loans outstanding, and although the interest rate on them was recently increased, it remains negative in real terms.
“The bills have been successful in reducing banks’ excess liquidity, but their design should be improved to better serve this purpose until a T-bills market develops-by reducing their maturity and possibly basing the purchase obligation on excess reserves,” it said. “Further funding of the DBE by the NBE should be discontinued, at least until the ongoing comprehensive assessment of its financial situation is completed and resolution measures are implemented,” it added
The IMF report has indicated that the country GDP at current market price stood at 2.138 trillion birr in 2017/18 fiscal year; a year ago it was 1.807 trillion birr.