Foreign currency shortages have been affecting the Ethiopian economy, and the government has come up with a comprehensive plan to address these shortages and stimulate the economy. The economic reforms are expected to be implemented over the remainder of the year as the East African country seeks to continue to grow its economy.
Ahmed Shide, Ethiopia’s Finance Minister, said that they have come up with a comprehensive strategy reform in a bid to sustain and advance economic growth in the country. The strategy will also place emphasis on the development of various parts of the Ethiopian economy.
Shide went on to speak about how foreign currency shortages are a significant bottleneck in the growth of the Ethiopian economy. The government is working comprehensively towards addressing the issue. One of the strategies being employed by the Ethiopian government is the privatization of some state-owned entities as the country seeks to attract foreign investment and thus increase the inflow of foreign currency.
Privatization of entities
The Ethiopian government is looking towards the partial and full privatization of some state-owned entities as they seek to ease forex shortages. Included on the list of enterprises that the government is considering for privatization are the country’s sugar development projects, hotels, railway projects, industrial parks, and some manufacturing industries.
Some of the country’s major enterprises are also being considered as part of the state-owned businesses that will be privatized in one degree or another. Ethiopian Airlines, Ethiopian Shipping, Ethiopian Telecom, Logistics Services Enterprise, and electricity generation projects may be opened up to investors as the government hopes that these will bring in the much needed foreign currency into the country’s coffers.
Boosting agricultural, manufacturing and mining exports
The economic reforms being introduced by the Ethiopian government will also aim at boosting the country’s agricultural sector, which has been a source of foreign currency through exports made by farmers. The country exports many crops, including roses to the international market, and increasing these exports would draw in more foreign currency.
Ethiopia’s Finance Minister said that they are working on boosting various parts of the country’s service sector including tourism and mining. Implementing all these strategies will help supplement the foreign currency earnings for the country.
Ethiopia has relied on remittances for some of its foreign currency earnings, and the government is planning on easing the restrictions around remittances. If more remittances flow into the country, there will be an increase in the forex holdings in the country. Remittance systems can provide much needed support to the export businesses of the country and provide relief to the country in terms of its foreign currency challenges.