PM Zenawi suggests Ethiopia's economy near "Collapse"

PM Zenawi suggests Ethiopia's economy near "Collapse"

Published 02/10/2011 - 4:44 a.m. GMT

During the latest parliament session in Addis Ababa, Ethiopian Prime Minister Meles Zenawi suggested his government’s recent market intervention was because Ethiopia’s economy is “on the verge of collapse” and even market fundamentalists would take similar measures when their economies are in danger.
Meles mentioned his alarming statements after an opposition official criticized the government’s economic policies. In January, the Meles government introduced price controls and restrictions on several goods in Ethiopia. While some analysts said the move had a short-term benefit for the poor, many say it would bring long-term economic problems for the country.
Analysts say the substantial devaluation of the local BIRR currency in September has also pushed up import costs significantly.
“The income of [Ethiopian] citizens has been depleted due to the devaluation of the Birr against a basket of major currencies, and there are severe constraints on the supply side, issues the administration has failed to address” said MP Girma Seifu of the Medrek/Forum opposition party, according to local newspaper Addis Fortune.
Girma said Meles Zenawi’s policy of price controls are anti-free market and Ethiopia’s inflation will continue to rise to dangerous levels. Girma said inflation in Ethiopia is largely due to shortages of supply. In response to Girma, Meles asserted that even “market fundamentalists” would use the same interventionist policies when their economies are in danger of collapsing.
According to reports, fuel and other energy expenses have also risen to dangerous levels in Ethiopia. This week, the Meles government admitted that at least 2.8 million Ethiopians need emergency food aid this year. Another 7.8 million impoverished Ethiopians are under a Safety Net program for food assistance. Despite Meles Zenawi’s claims that Ethiopia will begin to export electric power to other countries this year, critics say the majority of Ethiopians themselves do not have electricity.
The opposition blames the ongoing economic crisis on the poor leadership of Prime Minister Meles Zenawi. Like the ousted Tunisian President Zine El Abidine Ben Ali, Meles Zenawi has been in power for over 20 years. According to a recent confidential report by Wikileaks, some western government officials in Addis Ababa have been “struck by what they described as Meles’ poor understanding of economics “ and the London-based magazine The Economists said the Meles Zenawi government is “one of the most economically illiterate in the modern world.”