Economics - East Africa - Ethiopia - Development - Finance
Ethiopian PM seeks to stop policy requirements from donor countries
Ethiopian Prime Minister Meles Zenawi has urged foreign donors to assist his government’s five year strategic plan without making any policy requirement demands for their financial aid. He is also seeking the lifting of the ban on direct budgetary support following the May 2005 general election.

His announcement comes on the heels of a speech he gave in September in which he reprimanded Western donor countries in favor of India and China who he praised as being ‘dependable allies’ while advising African countries to take advantage of the new the global frontier created by the economic and financial crises.

A meeting with foreign donor groups in Ethiopia to introduce the Ethiopian government’s Growth and Transformation Plan (GTP), a development strategy for the next five years, was chaired by Sufian Ahmed Minister of Finance and Economic Development and his State Minister Mekonnen Manyazewal.

The five year strategic plan envisages laying a suitable platform that would transform the country from an agriculture based economy towards industrialization by the end of 2015.

While the strategic plan aims to increase Ethiopia’s agricultural output and thus reduce the Horn of Africa nation’s dependence on foreign food aid it also seeks to take advantage of the exports sector’s huge foreign currency potential by virtue of an eventual agricultural development.

After achieving targeted results in the first five year plan, the GTP envisages the construction of mega hydropower, railway and road development to ease infrastructural problems towards untapped mineral resource areas.

Financial requirement

But in order to successfully undertake the various projects under the GTP, the Ethiopian government requires over a trillion birr. An amount that requires the country to engage foreign development partners.

And after scrutinizing the plan, donors groups have raised several questions, most of which are related with policy and finance issues. They include: private sector involvement, social welfare, handling possible threats of overheating developments, aid effectiveness, etc.

Confirming that he is confident that the situation is manageable although he understands the financial challenges, PM Meles, who was present at the conclusion of the three day discussion, believes that mobilizing domestic resources and involving the Ethiopian Diaspora can help boost the government’s revenue.

Nonetheless, Meles Zenawi he also insisted that financial assistance should not be linked with donor policy recommendations but rather measure aid effectiveness through the quality of work and effective completion of financial obligations.

According to the Prime Minister, "there should not be a pre-policy requirement to access your financial assistance" as Ethiopia is a sovereign country. He also urged them to continue the budgetary support which was restricted following the 2005 election. An election that was considered by donors as having suppressed the rights of Ethiopians.

Nonetheless, Meles argued that infrastructural development in line with the GTP is vital if the private sector is to play both a significant role in boosting agriculture output and also contributing to Ethiopia’s industrialization process. And a successful completion of the GTP would also ensure social welfare because the strategic plan incorporates most of the pillars outlined in the Millennium Development Goals which give due emphasis to social welfare.


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