Macroeconomic Reform Ensured Sustainability of Ethiopian Banks: PM

Addis Ababa August 2/2024 (ENA)-Prime Minister Abiy Ahmed said that the macroeconomic reform has sustained the existence of Ethiopian banks.

In his explication about the recent macroeconomic reform yesterday, the premier noted that Ethiopia has been in a real predicament over the years because of the closed economy it pursued.

The export business for example failed to generate the required amount of foreign currency, and  Ethiopian products have been smuggled out.

The premier noted that Ethiopia has not also been able to benefit from Foreign Direct Investment (FDI) with its potential.

On the other hand, the expansion of the parallel market has led to inflation, putting pressure on citizens, he added. 

In this regard, the reform will lead to a more robust revival by addressing the fractures in the economy.

He further explained that the reform plays a crucial role particularly in sustaining the existence of the finance sector.

For instance, the Commercial Bank of Ethiopia has been making available the money it collected through bond purchases to many development projects that have failed to repay their loans.

He pointed out that this would make the bank debt-ridden and collapse if it fails to pay the debt.

And the collapse of the Commercial Bank of Ethiopia could have eroded trust in banks among Ethiopians, the PM noted. 

This situation would have threatened the existence of local banks in the market. 

The premier revealed that one of the issues raised by the government in its negotiations with the International Monetary Fund (IMF) and the World Bank concerned the Commercial Bank of Ethiopia.

He explained that as part of these negotiations, the bank has received about 700 million USD from the institutions. 

Abiy emphasized that this funding has sustained the bank's existence and will further ensure its participation in the development of Ethiopia.