Ethiopia: Hailemariam Desalegn admits sever forex crunch

ESAT News (January 9, 2017)

Ethiopian Prime Minister Hailemariam Desalegn on Monday admits the country has faced foreign currency crunch for the past three years.

The titular PM’s remark came in sharp contrast to several statements previously made by himself and other government officials denying that  foreign currency crisis was not an issue in Ethiopia’s struggling economy.

The Prime Minister denied the state of emergency declared in October after a wave of deadly anti-government protests hit the country had no impact on the country’s economy.

Desalegn blames the unexpectedly low prices in agricultural products in the international market, despite record high  productivity in the sector. Speaking to local reporters, the Prime Minister also said the fact that the country invests 40% of the GDP had contributed to the foreign currency crisis.

He said the regime had allowed Middle Eastern countries to deposit their money in Ethiopian banks to alleviate the forex crunch.

The World Bank and other monetary institutions have been warning that Ethiopia’s export trade has been in decline resulting in a crunch in foreign currency. The World bank recommended further devaluation of the Ethiopian currency, something the Ethiopian regime rejected outrightly. The regime insists the drawbacks from such measure outweigh the benefits.

Economists say the 36 billion dollar debt the country owes to lenders had put tremendous pressure on the economy on top of political instability that culminated in the imposition of a state of emergency, which resulted in sharp decline on the inflow of tourism to Ethiopia.