Macroeconomic Policy Prioritizes Livelihoods of Low-income Citizens, Says Finance Minister

Addis Ababa,August 2/2024(ENA)- The new macroeconomic policy of Ethiopia will be implemented in such a manner as to sustain the economic growth of the country and prioritizing the living standards of low-income citizens, Finance Minister Ahmed Shide said. 

He added that preparation has been made for the comprehensive implementation of the Homegrown Economic Reform during the first and second phase of the reform.

The macroeconomic reform will make the monetary policy reform framework to be led by market by improving the foreign exchange, monetary and financial policies as well as the public revenue and expenditures,  the minster elaborated.

The policy provides that wholesale and retail sale chains to be open for foreign competitors to ensure continuous, integrated and coordinated macro-economic development structure.

Attention will also be given to improve the revenue of public enterprises, by supporting the local investor and creating   healthy competitiveness of commercial banks and the financial system, the minister elaborated.

According to him, the integrated macroeconomic reform will be implemented in coordination and in partnership with international development partners, including the World Bank and the IMF.

He revealed that over the last three years plans were prepared based on the Homegrown Economic Reform and the National Bank Reform Roadmap to make the foreign exchange rate be determined by the market.

The move of Ministry of Finance to take the 850 to 900 billion Birr debt of the Commercial Bank of Ethiopia and make public enterprises free from debt has played crucial role in creating healthy financial system, the minister explained.  

The realization of the support of international financial institutions and donor countries to  sustain the economic growth of Ethiopia, has helped to boost foreign exchange reserve.

The minister said the main objective of the policy is creating a stable economic by carefully preparing and managing price hike and fluctuation of foreign in the short run.

Ahmed said the policy implementation and the negotiations conducted prioritized Ethiopia's  benefits for Ethiopia and the 4.9 billion USD obtained will play significant role in reducing the  debt burden of the country.

The support in the form grant and loan will be used for debt reduction, increasing the salary of low income public servants, implementing rural and urban safety-net programs, purchasing of fertilizers, subsidizing fuel, edible oil as well as implementing regular development programs.

The financial support will be disbursed under strict structural control and transparency to ease the pressure on those who would be affected by the implementation of the development programs and the reforms underway, according to the minister.   

He added that the macroeconomic team led by Prime Minister Abiy Ahmed has finalized preliminary preparations to organize and implement a system of financial subsidy for citizens with low salary and livelihood.   

The Office of the Prime Minister, Civil Service Commission, and Ministry of Finance coordinated financial preparations that will be used for subsidies salaries of low income public servants.

The federal government will earmark 90 to 95 billion Birr to be used to cover the subsidies, Ahmed disclosed.

Furthermore up to 100 billion Birr is  earmarked for fuel subsidies to benefit citizens in rural and urban areas of the country.