‘Bad sign’ as IMF withholds Ethiopia growth forecast

The IMF has failed to update data on the Ethiopia's economic recovery for 2022, sending shudders through investor outlooks as the government launches a fresh ground offensive in the Tigray region.

Tom Collins
October 20th 2021

Tom Collins
Trade & Investment

In a rare move reserved for war-torn countries and failed states, the IMF has not released a GDP growth forecast for Ethiopia in its latest World Economic Outlook for the next four years.

The only other countries excluded from the projections are Afghanistan, Libya and Syria.

While the IMF makes no explicit reference to the Tigray war, analysts say that the ongoing conflict is the most likely reason why the multilateral lender has withheld its predictions for Ethiopia’s economic recovery in 2022.

IMF World Economic Outlook Recovery and Projection Report released on October 12 leaves Ethiopia column blank.

The missing projections are a bad sign that could sour Ethiopia’s outlook for investors further, says Patrick Heinisch, an economic researcher at Germany-based commercial bank Helaba.

“Missing data forecasts naturally have an impact on the business environment. Every investor makes an in-depth analysis of the target country before making the investment. If data for Ethiopia are not available, companies ask themselves why.

“Even for conflict-ridden countries like Somalia or South Sudan projections are available. That may hold back investors and consequently desperately needed foreign exchange,” he says.

Read Aloud:   የጋምቤላ ክልል ነዋሪዎች ኢትዮጵያዉያን አይደሉምን ? ታዲያ ለምን? | Zehabesha Amharic

Sanctions countdown

The lack of macroeconomic data is just the beginning of Ethiopia’s growing list of economic woes.

In early October, the Ethiopian government expelled seven UN officials from Addis Ababa for allegedly interfering in internal politics. This further strained already tense relations with the international community and heightened the risk of sanctions.

The EU parliament demanded an “immediate cessation of hostilities by all parties” in October and called for wide range sanctions, including an arms embargo, against all the belligerents in the ongoing war.

The United States is also mulling a full range of options, including sanctions, in response to the worsening crisis, State Department spokesman Ned Price said on Tuesday.

The Ethiopian army launched a ground offensive in conjunction with allied Amhara militias to push Tigray forces out of the northern Amhara region on Monday, the region’s ruling Tigray People’s Liberation Front (TPLF) said.

Previous attempts to lobby the government to remove a blockade that is obstructing humanitarian aid has led to widespread famine in the Tigray region, the U.N. say.

Read Aloud:   ESAT RadioTV July 05 2014

“If the new Ethiopia National Defense Force (ENDF) offensive leads to human rights violations or attacks against civilians, as were observed during ENDF’s occupation of Tigray until June, the west could lose patience,” Heinisch says.

Yet before all out sanctions, experts believe that an initial step may first be removing Ethiopia from the US’s lucrative African Growth and Opportunity Act (AGOA).

“Ethiopia’s exports under AGOA account for almost half of its exports to the US. Most AGOA exports are concentrated in the textile industry which is a very labour intensive industry. The removal of AGOA membership could translate into massive job losses,” says Heinisch.

Many fear a worst case scenario where the current unresponsive nature of the government will eventually turn Ethiopia into a regional pariah, akin to Eritrea or the former regime in Sudan.

Wage of warfare

As the war in Tigray turns a year old in November, the economic cost of the conflict is stacking up.

Read Aloud:   Ethiopia Plans to Introduce Secondary Bond Markets Next Year

Prime Minister Abiy Ahmed said in July that infrastructure repair could cost up to $2bn, with more damage expected as the government intensifies its offensive.

Ethiopia’s debt service suspension initiative (DSSI) also runs out at the end of the year, leading to the full resumption of external payments in 2022. The government applied to the IMF for a new deal in September to restructure nearly $30 billion of external debt, and awaits the IMF executive board’s approval of disbursements from the Extended Credit Facility and Extended Fund Facility.

If Ethiopia can achieve external debt restructuring in the first half of next year, it will be a success for the government, says Heinisch.

Ultimately, as the war drags on with no end in sight, a negotiated ceasefire between both sides is the most crucial step to revamping investor confidence, he adds.



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  2. Subject: ‘Bad sign’ as IMF withholds Ethiopia growth forecast by Tom Collins, October 20th 2021

    Humble Opinion, 20 Oct 2021
    Here is the problem when the forecious Big Brother on the playing field dose not have possession of the “BALL” !!! As the Noble French saying goes >>> C’est la Vie or in the layman’s expression, with frightening posture >>> ‘get the hell out out of here, buddy’’. One does not fool-around with the Big Guy.

    Otherwise, you will make your little Life a play ground. In conclusion, Dear Ethiopia, watch your steps. Otherwise, your will have to say ‘good-bye ‘ to your seemingly infinite years of noble Life. No joke with uncle Joe. THE END

    Dear Readers:
    Please note that noble words like democracy > liberty > equality > freedom of expression > justice > even the right to sleep peacefully are not taken by all. They are used by those who have proportionate mussel to be ‘heard’ That is why we have wars — and (at the same time) we are all like inflated balls to be kicked around in various fashions and pumped to our limit__ which then, in turn, destroy ourselves in various fashions and laugh at others but sparing yourself to your tranquility in YOUR GRAVE i.e. THE END of yourself and others together. But, still, the cardinal question is : why did God create such a creature!?!? But then, who created GOD himself [he or she] ?!?!?! Indeed, the question is like an inflated ball — round, and round , and round to infinity.

    Message of THANKS to http://www.zehabesha.com
    I wish to send my humble and serious ‘THANK YOU NOTE’ for providing your visitors with space to express our views — and FREELY too. Unfortunately, WE AFRICANS are not bestowed upon with luck to enjoy freedom of expression of our thinking on any subject matter within the norms of decent communication. It is our problem that we have to solve. And it is the cardinal obligation of our supremely educated personalities that have to be —must be — the focal point in the solution for our excruciating AFRICAN problem from darkness to brightness of LIFE.

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    Blaming “colonialism” ad nauseam as an excuse —— though, of course, there is very strong fundamental historical CRIME done upon the decent people of BLACK AFRICA that History can NEVER DENY —— the prime responsibility of the Indigenous INTELLECTUALS, who themselves are also product victims of colonial “education” system, they in turn were used to hypnotize the MIND of the AFRICAN CHILD!!!!!!!!!!! It is a long sordid vicious circular CRIMINAL story., only future generation of Black Africans would attempt to explain and to establish a new healthy indigenous education system — especially on the subject of the History of Africa — a “MUST’ curriculum for ALL AFRICAN STUDENT, without exception.. In short, Africans must be “de-hypnotized” and become THEMSELVES.

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