- Ethiopian economy during the current fiscal year is estimated to shrink to 2 percent due to the impact of the Covid-19 pandemic according to the IMF.
- IMF has projected an expansion of Ethiopia’s economy by 8.7 percent in the 2021/22 fiscal year, consistent with a global recovery.
Ethiopian economy during the current fiscal year is estimated to shrink to 2 percent due to the impact of the Covid-19 pandemic according to IMF. However, IMF has projected an expansion of Ethiopia’s economy by 8.7 percent in the 2021/22 fiscal year, consistent with a global recovery.
An IMF team was in Ethiopia recently to review the economic scenario. In a statement issued, IMF said that the COVID-19 pandemic continued to create significant health, social and economic challenges in Ethiopia. The Fund also remarked that wide-ranging policy responses mitigated some of the impacts of the crisis while supporting macroeconomic stability. The government responded to the crisis by fiscal measures such as increasing expenditures and some tax policy measures to address the health crisis, social needs and support the economy.
IMF noted that the injection of liquidity by the central bank supported the banking system and firms that were adversely affected by COVID 19.IMF also observed that inflation that stood at 23 percent in April 2020 still remains high at just over 19 percent, driven largely by persistently high food prices. Ethiopia’s economic outlook IMF felt continue to face uncertainties such as the magnitude and duration of the pandemic, as well as other risks including political uncertainty and the locust infestation experienced in some parts of the country. The team expects a modest fiscal expansion this fiscal year to accommodate the humanitarian assistance and reconstruction needs. It observed that financial sector reforms had progressed, with the development of a treasury bill market reducing the need for monetary financing of the budget.
