By: Kassahun Chanie
Ethiopia's Finance Minister Ahmed Shide has unveiled details of the nation's ongoing macroeconomic reforms, acknowledging significant challenges while reaffirming the government's dedication to economic stability and citizen well-being.
In an exclusive interview with EBC, Finance Minister Ahmed highlighted a suite of encouraging economic indicators while openly addressing the substantial financial resources dedicated to cushioning the impact of global market fluctuations on the Ethiopian populace. This multi-pronged approach underscores Ethiopia’s dedication to responsible economic management coupled with a deep sense of social accountability.
Minister Ahmed conveyed a message of cautious optimism regarding Ethiopia's economic trajectory, citing visible improvements across several key areas. "We are observing a positive shift in our economic momentum," he stated. "This is evidenced by a significant upturn in revenue collection, a notable strengthening of our foreign exchange earnings, and robust improvements in our export performance."
He further pointed to the crucial role of increased savings within the banking sector, which in turn is fueling lending and providing vital stimulus to the economy. These advancements, he emphasized, are the direct result of strategic reforms implemented with the cooperation of Ethiopia’s development partners.
Acknowledging the volatility of global markets, particularly in energy, Minister Ahmed elaborated on the government's approach to mitigating the impact of global price fluctuations on the Ethiopian people.
"The implementation of a market-based foreign exchange rate system is a necessary step for long-term economic stability. However, we are also keenly aware of its potential to impact the cost of essential goods like fuel and fertilizer," he explained.
According to the Minister, to counteract this potential hardship, the government has implemented a system of substantial subsidies, reflecting its proactive approach to price management.
The scale of the government’s intervention became clear when Minister Ahmed revealed the massive investment in fuel subsidies, stating, “We are currently spending approximately 4.5 billion dollars annually to import fuel, and we are committed to selling it at prices significantly below global levels to ease the pressure on our community.”
He further revealed that the government has dedicated a staggering 267 billion birr over the past years towards fuel subsidies, underscoring the immense financial commitment to keeping fuel prices affordable for the Ethiopian public.
Moreover, the government has allocated a further 100 billion birr in the current year to bolster the subsidy program, reflecting a continued commitment to ensuring affordable fuel access. This direct subsidy, the Minister clarified, is channelled through the Ministry of Finance to the fuel supply company, replacing the previous model of the Fuel Stabilization Fund.
He also emphasized the need for prudent consumption and cautioned against illegal trading, indicating the establishment of a task force to counter smuggling and related illicit activities.
The Minister further stressed that the reform program has been carefully designed to minimize the impact on vulnerable groups.
"We have allocated over 400 billion birr in additional budget specifically designed to support low-income populations," he announced.
This includes subsidies for essential commodities such as fuel, fertilizer, medicines, cooking oil, and sugar, according to the Minister.