From: Biniam Haile \(SWE\) (eritrea.lave@comhem.se)
Date: Thu Jun 04 2009 - 23:14:48 EDT
Harsh Austerity Measures Implemented in Ethiopia
By Peter Heinlein
Addis Ababa
04 June 2009
Ethiopia, already among the poorest countries, has suffered a series of
recent economic setbacks, forcing officials to take drastic
countermeasures to avoid a financial meltdown. Economic growth
projections have been slashed amid shortages of critical items,
including foreign exchange, electricity and food.
The roar of generators echoes through the streets of Addis Ababa's
fashionable Bole district. It is another "power out" day, an energy
saving scheme that leaves people without electricity for as much as 14
hours, three days a week.
But places like Bole that can afford generators comprise less than half
of one percent of Ethiopians.
To shopkeepers without generators, like laundry operator Tewodros Haile,
no electricity means little or no profit. He says if this keeps up,
he'll soon be forced to close.
"Business has decreased by at least 50 percent almost," he said.
"Whenever we don't have the power we have to put our staff, we have to
pay overtime. Our expense is increasing because of the overtime. We
cannot continue like this."
The power outages have aggravated Ethiopia's critical foreign exchange
crunch. Exports of coffee, which last year accounted for nearly
two-thirds of the country's $1.5 billion export earnings, are down as
much as 40 percent this year.
With hard currency reserves sagging to just enough to cover a few weeks
imports earlier this year, the government had exempted major exporting
industries from the power cuts. But conditions deteriorated when the
hoped-for rains failed, leaving the country's hydroelectric power plants
without water. So the state-owned Ethiopian Electric Power Corporation
last month notified exporters they too would face cuts.
The grim outlook is forcing economic planners to dramatically scale back
growth projections. Initially, they predicted an increase of as much as
20 percent in export revenues. But in a report to parliament last month,
the Trade and Industry Ministry conceded revenues might miss the $2.5
billion target by more than $1 billion.
Tewodros Mekonnen of the Ethiopian Economic Policy Research Institute
says that could mean zero export growth this year.
"Since we are a developing country, our exports grow a bit rapidly, so
we have exports growing at 18 to 20 percent each year. this year
comparing nine months exports ... comparing it to last year, the growth
is almost zero percent, which is considered serious for us," said
Mekonnen.
Prime Minister Meles Zenawi earlier predicted Ethiopia's economy would
grow more than 11 percent this year despite the global economic
slowdown. The International Monetary Fund's projection was a more modest
six percent, at most.
Economist Tewodros Mekonnen says the IMF figures look more realistic.
"The economy has been growing 11 percent, and the government is
maintaining that 11 percent will continue. but there are some people who
say because of the crisis, 11 percent growth is considered a miracle,"
said Mekonnen.
For average Ethiopians, the falling growth figures and power outages are
just more in a long succession of hardships that have kept their country
at the bottom of the world's development index. For the educated young
along Addis Ababa's Bole Road, like shop clerk Hayat Mohamed, it means
scaling back dreams of taking part in the global IT (information
technology) revolution.
"At first it was all about we want a faster Internet connection and I
wish I could have this and that. But now it has come down to, I wish I
could have electricity. We're just hoping for some improvement," he
said.
In a country where a fewer than 20 percent of the people have
electricity, the economic concerns of most Ethiopians are about simpler
things, such as food.
The June 1 U.N. Humanitarian Bulletin for Ethiopia suggests food
shortages and malnutrition rates may be as bad as last year, when
officials clamped a lid on publicity about starving children after some
news reports compared conditions to the famine of the mid-1980s.
The U.N World Food Program estimates the national relief program will
fall nearly 178,000 metric tons short of assessed needs for the second
quarter of the year.
Listen to Peter Heinlein's report from Addis Abeba
http://www.voanews.com/mediaassets/english/2009_06/audio/mp3/BKG%20Heinl
ein%20Ethiopia%20Economy%20562562%20060309%20vb_0.mp3
http://www.voanews.com/english/2009-06-04-voa8.cfm
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