ETHIOPIA-FINANCE: IMF clears 21 million dollar credit
WASHINGTON, Nov 10 (IPS) - The International Monetary Fund (IMF) announced here Wednesday that it has approved a credit for about 21 million dollars to support the Ethiopian government's ongoing economic reform programme.
The credit, which will be disbursed by the Fund's Structural Adjustment Facility (SAF), is the third annual installment of a loan first approved in October, 1992.
In announcing the loan, the IMF said major elements of the government's programme have been put in place and most of its objectives achieved.
In 1993-94, however, real growth of the country's gross domestic product (GDP) fell below expectations -- at 1.3 percent -- due to poor weather and its effect on afood production, the IMF said.
The programme's medium-term objectives include reaching by 1996- 97 of a six-percent growth rate, a reduction in inflation to below four percent, an external account deficit of 2.2 percent of GDP, and foreign exchange reserves equivalent to more than four months of essential imports.
Over the next year, the government hopes to achieve a 5.5 percent growth rate and an inflation rate of 10 percent -- which, because of this year's poor harvest, is significantly higher than the 1.2 percent of the previous year.
In order to reach these goals, the government plans to keep the growth in the money supply under control and reduce the fiscal deficit from about 17 percent of GDP to about 13 percent (excluding grant aid).
The government also intends to launch its privatisation programme by offering for sale all state-owned retail shops and at least 29 hotels and restaurants, according to the IMF.
The programme also includes money for providing severance pay to workers in public enterprises and the civil service who are laid off as a result of budget cuts, the Fund said.
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