Addis Ababa, September 30, 2009 — The International Monetary Fund (IMF) has a troubling outlook on Ethiopia’s position of balance of payments for the coming Ethiopian fiscal year, it says.
Despite strong growth performance over the past six years, the economy is now getting into a tough row, with a widening trade deficit, hence the toll on foreign exchange crunch, the IMF said.
“The Ethiopian authorities face a challenging immediate macro economic situation, notwithstanding … the important progress made in raising living standards and reducing poverty,” the IMF said in this report issued on Wednesday, September 23, 2009. “Ethiopia is facing a difficult external environment.”
This comes as a result of low level foreign currency reserve constraints and the fight to keep inflation at bay in the domestic economy. Ethiopia’s balance of payments has been under heavy pressure over the past two years as a result of escalating cost of imports - from 1.4 billion dollars in 2002-03, to 6.1 billion dollars in 2008-09 - and a slow growth on its exports, remittances and foreign direct investments.
This is all bound to get worse, according to the IMF.
Balance of payments, an economic measurement, is used to summarize all international economic transactions for a country during a specific time period, usually a year. It is determined by a country’s exports and imports of goods, services, and financial capital, as well as financial transfers.
The global recession will have taken its toll on the country’s earnings from export, remittance and foreign direct investment in the coming year, while the IMF also projected a fall in official development assistance. The IMF also sees a possible increase on the global oil prices, which was a development that literally ate up the nation’s reserve last year.Read More
No comments:
Post a Comment