“Now is time to share resources, not to grow rich,” Dr. Eyob Tekalign, State Minister of Finance
Dr. Eyob Tekalign, State Minister of Ethiopia’s Ministry of Finance, says it has been months since Ethiopia began implementing a home-grown economic reform to boost its economic potential. In this short period, many improvements have been implemented and encouraging results have been recorded. However, the novel coronavirus pandemic has now became a major obstacle to the global as well as Ethiopia’s economic growth. Dr. Eyob Tekalign provides explanations relating to the economic impacts of the virus and what steps the government is taking to overcome the outbreak.
How is Ethiopia implementing its home grown economic reform program, emerging from the crisis for over the past two decades?
Dr. Eyob: As in the political reform made in Ethiopia, a number of reforms have been also taking place in the economic sector. The implementation of “home grown economic-reform” is in good developments. By identifying the gaps in the economic sector so far, the home grown economic reform aimed at three basic sub sectors such as macro-economic, structural and sectorial reforms.
In this case, the reform measures being taken to balance the country’s macroeconomic disparity brings fruitful changes. For example, in terms of credit, Ethiopia has been drafted into a transition program from a country that has a high debt burden. In the financial sector, the measures to modernize the fiscal policy also scores positive outcomes. In this case, Ministry of Finance minimizes its direct advance loan from National Bank of Ethiopia. In addition, the efforts taken to improve banks procedures and to launch capital market shows improvements.
On the other side, the policy and procedural measures taken to encourage export trade has brought meaningful changes. Revenue collection has been strengthened, in which it meets 100 percent of the target over the past seven and eight months. The other focus of the economic reform is sustainable economic development and makes it participatory to prove the public benefit. With this principle, different economic sectors become widened.
Developing the tourism sector is among the sectors that show good improvements following the reform in developing main tourism attraction sites. The joint efforts to develop this sector help the country to widen the income generating system from the tourism sector.
By improving the mining sector, the reform plays crucial role to make this sector as main contributor to the national economy. In the mining sector, the measures taken in Tigray, Benishangul and Oromia states are exemplary.
During the past two years, the reform has also registered meaningful result in transforming the agricultural sector from traditional way of farming to modern one. To modernize the agricultural sector, the government decides to import agricultural mechanization materials through duty free tax policy. Following this the government decision, many farmers are importing tractors. This is among the core measurements to develop the agricultural sector.
The reform also helps the private sector to become the engine of the country’s economy. The reform measurements are making the country’s economy healthy and balanced.
Economists saying: It is difficult to make the home-grown economic reform without undertaking real structural changes in institutions. What is your position in this case?
Dr. Eyob: As it is said, to make real the home-grown economic reform, developing the capacity of institutions got serious attention. The economic reform program is implementing by the macro-economic team led by Prime Minister Dr. Abiy Ahmed. Under this team, the macro economic reforms are being jointly implemented in institutions.
Generally, the macro economy was jointly led by National Bank and Ministry of Finance. Secondly, the private and investment sector reform is coordinated and administered by Investment Commission, and Ministry of Trade and Industry while the job creation commission is under Prime Minister Abiy’s follow-up where state presidents are members of this organization.
The procedural activities on every sector are being implemented in parallel with the macroeconomic plan whereas the implementation follow-up is evaluating every week. The core economic sectors are identified and under continuous follow-up.
Hence, the reform reaches in institutions. Therefore, lots of works have been made to develop the implementation capacity of civil servants and to help them serve as a development army. Since the civil service is part of this comprehensive reform, it is not time-consuming to take corrective action, as it is only a beginning and not a complete one. But, the overall results are promising.
Was it not important to build the capacity of institutions before going into implementation?
Dr. Eyob: Building the capacity of the institutions has begun before. In fact, it has brought fruitful changes within a short period of time. All of the improvements that have been implemented so far have been done by the institutions within their limited human resources.
It is noteworthy to emphasize the fact that institutions are at their best, and even beyond the reach of their potential. Now that we can get past the problem of the Corona virus in the country, we will properly continue our efforts in building institutions’ capacity.
How do you explain the influence of COVID-19 in the ongoing Ethiopian economic reform program? How much is its influence?
Dr. Eyob: It is clear that the Corona virus is now shaking the world. In fact, the world has never faced such challenges after World War II. Currently, the world has locked down its doors partially. Following the outbreak of the virus, the tourism and import-export sectors in the Ethiopian economy is highly affected since many countries closed their doors.
Ethiopian Airlines has also a lion share directly and indirectly in the country’s economic growth. Currently, the airlines canceled over 80 percent of its destinations, this have its own influence on the economy of the country. The tourism sector has also crucial role in Ethiopia’s economy; it has already locked down partially. This has put significant influence on hotel, tourism and travel agencies.
The horticulture sector is also highly affected by COVID-19. In fact, the economic sectors are integrated each other, when one sector affected it touches the other. Hotel, tourism, industry, export trade are directly faced the problem. The integrated nature of the problem affects the livelihood of every person up to the household level. Measures taken by the government could limit the possible effects on the health of citizens.
What is expected from producers, distributors, importers and exporters to redress societal problems?
Dr. Eyob: The supply of goods and essential products must not be stopped. In a country like Ethiopia, the accumulated wealth of grain has no meaning if it is stored for years and months. Therefore, it is important to ensure the free movement of productions from one place to another through providing the necessary protection. People can generate profit when a country survives. Our view should first discover how much risk our country faces. It is also essential to keep production and productivity as sustainable as possible. The movement of goods and products should not be interrupted. Retailers and wholesalers need to understand that now is the time to share our resources. For us, now is the time to share, not to accumulate wealth. Unless we don’t feel others problem as ourselves, we can’t control the epidemic at all.
What do we expect from IMF, WB and other international organizations in order to combat the pandemic in developing counties?
Dr. Eyob: The Covid-19 pandemic leads the world to crisis. Especially, developing countries couldn’t survive in short period of time without international support. In this case, identifying the necessary support, the government presented the desired requests to organizations.
At this critical time, WB and IMF are providing loans and aid to developing countries. For example, WB provides over 80 million USD aid for health related expenditure. We are asking IMF for similar support. In addition, strengthening bilateral relations with different countries, the government has been now collecting supports. Of course, Ethiopia needs 1.5 billion USD emergency supports for three months to fight the pandemic.
It is difficult for developing countries like Ethiopia to survive from such economic crisis without external support. The World Bank and the International Monetary Fund have also called on countries to report if they are unable to repay their loans. But, countries didn’t respond yet. We are expecting responses from lender countries to suspend payment period.
If the epidemic is getting worse, what could be the government’s decision from a financial standpoint?
Dr. Eyob: Since there is no urgent issue other than this global health crisis, the government will take all the necessary measures to limit the pandemic. Hence, government’s focus will totally be shifted to the health sector by postponing other national mega projects for the time being. The public must know that the
government is taking all preparations to fight the pandemic, and play their role and responsibility as well.
Source: The Ethiopian Herald