It may Exceed 10 Percent - Deputy Prime Minister

Thursday, 9 June 2011

Ethiopian economic growth may exceed 10 percent contrary to the International Monetary Fund's prediction on May 31 that it would fall from 7.5 percent this year to 6 percent in the 2011/2012 fiscal year, Hailemariam Desalegn, deputy prime minister of Ethiopia, said yesterday. IMF had said that the country's monetary policy was pushing up inflation which, combined with restrictions on bank lending, would in turn bring about a slower economic growth.

Hailemariam said that expansion would not drop below 9 percent in the fiscal year to 7 July 2012, from 11.4 percent this year. The economy has expanded an average of 11 percent over the past seven years according to IMF data.

According to the deputy prime minister, this year's sharp increase in inflation is the result of global food and fuel price hike and not loose monetary policy. He said that the price of oil had risen due to the current unrest in the Middle East and when that problem is solved, the price would go down. Therefore, he said, the problem Ethiopia is facing is only temporary.

The inflation rate jumped to 29.5 percent in April from 25 percent a month earlier as food prices increased, the Central Statistical Agency said on May 10. And according to IMF, broad money-supply growth was 35 percent at the end of March, which had previously projected growth of 22 percent in money supply this fiscal year.

Source: Bloomberg.com