The economy of Ethiopia, valued at 80 billion dollars, will grow by 8.5% next year, International Monetary Fund (IMF) says.
This will make the country the second fastest African economy to grow next to Libya, whose economy forecasted to recover by the end of 2018.
The projection was made following the conclusion of the 16-day visit by IMF staff team led by Julio Escolan, who had delivered the report to Prime Minister Abiy Ahmed (PhD) last week.
The Fund remained optimist about the economic outlook of Ethiopia despite the tough Macroeconomic situation in the country where businesses are suffering because of the unrest and instability in many parts.
“Over the last decade, Ethiopia has maintained high economic growth and made commendable progress in considerably reducing poverty and improving living standards,” the report reads. “Growth is expected to edge up as it ll be supported by stronger confidence as the uncertainty of the previous year recedes, and the availability of domestic and foreign direct investment improves.”
The Fund released the report as Ethiopia prepares to allow local and international investors to buy stakes in some of its largest state-owned enterprises, marking an important U-turn given the state’s distaste for capitalism.
IMF also commended the recent reforms made since Prime Minister Abiy Ahmed came to power.
The Fund calls for measures to reduce public sector borrowing and reduce inflation, which reached around 14% last month, back to target, as external imbalances and indebtedness remain a source of risk.
It has also suggested the government to maintain an appropriately tight monetary and fiscal policy stance, along with a more flexible exchange rate regime, and implement reforms aimed at developing the financial system and markets, signalling the possibility of establishing stock exchange.
Such macroeconomic policies, coupled with the announced reforms, will improve competitiveness, reduce external imbalances and rebuild buffers, while raising the growth potential of the economy over the medium term.