From: Berhane Habtemariam (Berhane.Habtemariam@gmx.de)
Date: Wed Sep 30 2009 - 05:23:43 EDT
IMF Team Concludes Article IV Consultation Mission to the State of Eritrea
Press Release No. 09/337
September 30, 2009
An International Monetary Fund (IMF) mission visited Eritrea during
September 14–29, 2009 to conduct the 2009 Article IV consultation
discussions.
<http://www.imf.org/external/np/sec/pr/2009/pr09337.htm#P19_289> 1 The last
Article IV consultation was concluded in April 2008. The mission met with
Mr. Ali, Minister of Energy and Mines, Mr. Woldemariam, Acting Governor of
the Bank of Eritrea, Mrs. Woldeghiorghis, Director General of the Treasury
and Mr. Tesfaldet, Director General of the Budget (both in the Ministry of
Finance), other senior officials, and representatives of the international
community and civil society. The mission is grateful to the authorities for
their very warm hospitality and fruitful discussions.
Mr. Mario de Zamaróczy, mission chief for Eritrea, issued the following
statement today in Asmara:
“The mission reviewed economic developments since the last consultation and
discussed the authorities’ macroeconomic policies against the backdrop of a
severe drought in 2008, the international food and oil price crises, and the
global recession. In the wake of these exogenous shocks, Eritrea’s economic
performance has weakened, with growth remaining elusive, while inflation has
accelerated and progress in fiscal consolidation, stalled.
“The mission noted a number of areas where progress had been made. These
included continued investment in agricultural and irrigation projects to
wean the country’s farming industry progressively away from dependence on
irregular rainfall; public investment program in targeted key sectors, such
as education, health, mining, infrastructure, cement production, tourism,
green energy, and fisheries. These investments are expected to contribute to
a resumption of growth in the medium term. However, even with the positive
impact of forthcoming mining and cement productions, Eritrea’s medium-term
outlook could present downside risks. The mission expressed concerns with
regard to the size of the fiscal and current account deficits, external and
domestic debt levels, and high inflation. Growth, even with the maturation
of earlier investments, may remain below the level necessary to achieve a
significant reduction in poverty.
“The policy discussions centered on a number of possible policy measures to
rekindle economic growth and private sector activities. In the short run,
the focus should be on restoring macroeconomic and financial balances,
through fiscal consolidation; reducing banking sector financing of the
budget deficit; and relaxing import and exchange controls to re-launch
imports of basic and intermediary goods. As global pressures recede, it
would be important to bring inflation under control through restrained
fiscal and monetary policies. The government’s expenditure prioritization
efforts were identified as key to raising the effectiveness of public
outlays in a resource-constrained environment. In the medium term, the focus
should be on measures that promote external competitiveness; liberalization
of the financial sector; removal of administrative bottlenecks; and
promotion of private investment in the productive sectors. The mission
believes that with the right set of reform policies and building on the
country’s rich human and mineral resource potential, Eritrea could be well
placed to rebound as the world recession wanes.
“The mission welcomed the authorities’ renewed interest in drawing on the
IMF’s and other donors capacity-building assistance to develop institutional
and human capacity in the civil service. The mission noted that the IMF’s
East Africa Regional Technical Assistance Center (East AFRITAC) was well
placed to provide technical assistance on a grant basis.
“It is expected that, subject to IMF management approval, the IMF’s
Executive Board will consider the mission’s report in December 2009.”
_____
<http://www.imf.org/external/np/sec/pr/2009/pr09337.htm#P19_290> 1 Under
Article IV of the IMF's Articles of Agreement, the IMF holds bilateral
discussions with members, usually every year. A staff team visits the
country, collects economic and financial information, and discusses with
officials the country's economic developments and policies. On return to
headquarters, the staff prepares a report, which forms the basis for
discussion by the Executive Board. At the conclusion of the discussion, the
Managing Director, as Chairman of the Board, summarizes the views of
Executive Directors, and this summary is transmitted to the country's
authorities.
IMF EXTERNAL RELATIONS DEPARTMENT
Public Affairs
Media Relations
Phone:
202-623-7300
Phone:
202-623-7100
Fax:
202-623-6278
Fax:
202-623-6772
----[This List to be used for Eritrea Related News Only]----