The international financial institutions claim that the Growth and Transformation Plan adopted by Ethiopia is over ambitious. The Ethiopian government counters the allegations by pointing to the 11.4% growth recorded in the last fiscal year.
The plan leans too heavily on output by public companies such as Sugar Corp. and Metal and Engineering Corp. and may put the whole macro economic stability at risk according to a World Bank official.
The success of the plan is attested by the impressive 11.4% growth recorded argues Meles Zenawi Prime Minister of Ethiopia. The 15% annual growth set in the growth plan is a marker to urge progress and all financial planning is figured according to the more realistic 11% mark explained the Prime Minister.
The IMF alleges that the government is following a distorted economic plan that can very well lead to macro economic disability. The International financial institute cites the high rates of inflation and the Growth plans commitment to slash those rates to single digits as another cause for concern.The inflation is something that the Ethiopian government has taken into consideration and is working towards alleviating explained Meles. The high rates of inflation were caused by multiple challenges including the effects of the global market he said.
Local factors for inflation are the unexpectedly high amounts of foreign currency reserves at the central bank and faulty deficit financing by the government in the last fiscal year said Meles. The Prime Minister asserted that foreign currency will be properly utilized in purchasing and that government will not borrow directly from the central bank this budget year to eliminate local factors of inflation.
Source: Bloomberg/ The Reporter.
