Friday, June 7, 2013

Ethiopia sees 10 pct GDP growth in 2012/13, above IMF forecast

By Aaron Maasho ADDIS ABABA (Reuters) - Improved agricultural output will accelerate Ethiopia's economic growth to 10 percent this fiscal year, a government minister said on Thursday, giving a much higher forecast than the IMF. Agriculture accounts for nearly half Ethiopia's output but heavy public spending on infrastructure spurred 8.5 percent growth in 2011-2012, making it one of Africa's fastest growing economies. As in previous years, the government's forecast for fiscal year 2012/13, which ends on July 7, differs sharply from the International Monetary Fund's (IMF) projection of 6.5 percent. "We expect to achieve the minimum target of 10 percent growth rate through agriculture," Ahmed Shide, state minister of finance and economic development, told Reuters in an interview. Better rains have improved harvests this fiscal year, though details of the annual agricultural survey are not yet available. Principal crops include coffee, pulses, oil seeds and cereals.

 The IMF told Reuters last month volatile inflation, pressures on the balance of payments and a stifled private sector raised doubts over the sustainability of Ethiopia's growth model. The Washington-based body said that Ethiopia's public spending on mega-dams, roads, schools and other infrastructure required massive domestic funding which was hampering the private sector's access to credit.
 Ahmed recognised financing was an issue but dismissed the IMF's concerns. "What we are doing is enabling conditions for the private sector activities to have good infrastructure and human skills in the economy and the facilitation of social development so that business activities can flourish in the country." Ethiopia, Africa's second most populous country after Nigeria, is midway through a five-year economic plan that aims to expand the road network to 136,000 km (84,500 miles) by 2015 from below 50,000 km in 2010. It also plans to construct 5,000 km of railway lines by 2020. Addis Ababa secured a $1 billion loan from China in April to build electricity transmission lines. China is also building a section of railway linking landlocked Ethiopia with neighbouring Djibouti's port. "China, India, Brazil, Turkey and others - we need to attract investment, technology transfer, infrastructure financing and trade relationships," Ahmed said. The BRICS countries - Brazil, China, India and Russia and South Africa - are now Africa's largest trading partners and its biggest new group of investors. Standard Bank sees BRICS-Africa trade exceeding $500 billion by 2015.