Ethiopian Economy Collapsing 'Imminent' - IMF Report

"September 3, 2011 - The International Monetary Fund (IMF) had recently written a report with serious concern about the macroeconomic environment in Ethiopia, according to the Ethiopian Reporter. According to the report, unlike the previous reports, this one did not see the light of day. The strongly-worded report, which voiced serious concern over the macroeconomic environment in Ethiopia due mainly to the wrenching inflation, is not going to appear on the fund’s website, media outlets or be made public in any form. It has been blocked as result of a serious protest from Ethiopia, said sources.


“Macroeconomic performance has deteriorated markedly,” read the report. And the primary premise behind this conclusion, as stated by the sources, is the loose monetary policy pursued by the government. Back in May the team, led by Paul Martin ex-Canadian PM and finance minister, has been in Ethiopia for close to three weeks talking to various stakeholders. Unlike the full report, which was rejected by the government, the preliminary findings of the team were, in fact, made public.

As opposed to the Fund’s conclusion that Ethiopia and other sub-Saharan economies pulled through the 2008/09 crisis with minimum damage due mostly to the macroeconomic prudency at the time, the conclusion this time around seems to take 180 degrees turn. According to sources, the inflationary pressure in the country and weak management of monetary policy are sending the overall macroeconomic framework of the country into disarray.

As one of the member countries, Ethiopia has the mandate to check the release of any report on its economy. IMF’s policy on transparency also says that ‘as long as the member country is willing and voluntary to discharge such information’. Nevertheless, countries like Brazil, China, Venezuela and others have done the same in the past (block a report). It is not without reason though, explains professionals. One of the primary concerns is its negative effect on the Foreign Direct Investment (FDI) flow to the country. Countries which fear that the release of the report could jeopardies investors’ confidence, affect their exchange rate policy or stock markets operation could take the move to suspend the announcement of the report."