{
  "title": "Press Release: IMF Executive Board Concludes 2014 Article IV Consultation with the Federal Democratic Republic of Ethiopia",
  "publication": "IMF News, October 3, 2014",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr14458",
  "canonical": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr14458",
  "overlayPath": "/en/news/articles/2015/09/14/01/49/pr14458/index.md",
  "summary": "On September 24, 2014, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Ethiopia.",
  "publishDate": "2014-10-03",
  "sections": [
    {
      "heading": "Overview",
      "content": "- On September 24, 2014, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Ethiopia.\n- Ethiopia’s recent macroeconomic performance described as strong, with robust economic growth supported by higher agricultural production, and large public sector and foreign direct investments.\n- Inflation remained contained in single digits; the fiscal stance at the general government level is described as cautious, though public enterprises continue to provide an expansionary impulse."
    },
    {
      "heading": "Fiscal developments and public sector financing",
      "content": "- General government budget execution in 2013/14 reflects conservative spending.\n  - Recurrent spending is estimated to remain at 7.4 percent of Gross Domestic Product (GDP).\n  - Capital spending-to-GDP ratio will increase by about 0.3 percentage points to 11.0 percent of GDP.\n  - Overall revenue-to-GDP ratio estimated to fall from about 14.6 in 2012/13 to about 14.1 in 2013/14, mainly due to a decline in nontax revenue which more than offset tax revenue improvement.\n  - General government budget deficit, including grants, estimated at 2.7 percent of GDP in 2013/14, compared to 2.0 percent of GDP a year ago.\n- Public enterprises continued to borrow heavily from the banking system and externally to finance investments.\n  - Financing of the overall public sector likely on the order of 10 percent of GDP in 2013/14.\n  - Public and publicly guaranteed (PPG) external debt estimated to have increased to about 23 percent of GDP from 20.5 percent of GDP in 2012/13.\n- Government finances (selected ratios, percent of GDP)\n  - Revenue: 13.9 (2011/12); 14.6 (2012/13); 14.1 (2013/14 (Est.))\n  - Tax revenue: 11.6; 12.5; 13.0\n  - Nontax revenue: 2.3; 2.0; 1.1\n  - External grants: 1.7; 1.5; 1.6\n  - Expenditure and net lending: 16.8; 18.1; 18.4\n  - Fiscal balance, excluding grants (cash basis): -2.9; -3.5; -4.3\n  - Fiscal balance, including grants (cash basis): -1.2; -2.0; -2.7\n  - Total financing (including residuals): 1.2; 2.7; (no value for 2013/14 provided)\n  - External financing: 0.9; (no value for 2012/13 and 2013/14 provided)\n  - Domestic financing (not including privatization): 0.5; 0.2; (no value for 2013/14 provided)\n  - Public debt: 32.7; 37.4; 44.7\n  - Domestic debt: 16.9; 22.2; (no value for 2013/14 provided)\n  - External debt (including to the IMF): 17.9; 20.5; 22.6\n  - Overall balance (in millions of U.S. dollars): -1,067; 338; -57\n  - Gross official reserves (in millions of U.S. dollars): 2,262; 2,368; 2,761"
    },
    {
      "heading": "Monetary policy and inflation",
      "content": "- Tight monetary policy supported the NBE’s inflation objective in 2013/14.\n  - Inflation remained in single digits throughout the year and was 8.5 percent in June 2014.\n  - Food prices rose by 6.2 percent; non-food inflation in the double-digits.\n- Base money increased by 17.5 percent in April 2014, driven mainly by:\n  - Claims on government: 19.6 percent\n  - Claims on non-government: 11.2 percent\n- Money and credit (annual percentage change / percent of beginning period stock of broad money)\n  - Net foreign assets: -11.6; 3.1; -0.5\n  - Net domestic assets (including other items net): 44.5; 21.0; 25.6\n  - Broad money: 32.9; 24.1; 25.1\n  - Base money (annual percentage change): 0.4; 13.6; 16.7\n  - Velocity (GDP/broad money): 3.91; 3.64; 3.39"
    },
    {
      "heading": "External sector developments",
      "content": "- Developments mixed: deterioration in the trade balance offset by net inflows on services and transfers.\n  - Current account deficit estimated to have widened from US$2.8 billion (6.0 percent of GDP) in 2012/13 to US$3.5 billion in 2013/14 (7.1 percent of GDP).\n  - Deficit financed largely by concessional and non-concessional inflows and foreign direct investment (FDI).\n  - Substantial capital account inflows facilitated a modest build up in the NBE’s reserves.\n  - Exchange rate adjusted only gradually under the NBE’s managed float policy.\n  - Premium in the parallel market remained modest; gradual nominal depreciation insufficient to prevent an appreciation of the real effective exchange rate.\n- External sector indicators (annual percentage change / percent)\n  - Exports (U.S. dollars, f.o.b): 14.8; -2.6; 9.1\n  - Imports (U.S. dollars, c.i.f): 33.5; 4.1; 12.7\n  - Export volume: -0.2; 9.4; 14.7\n  - Import volume: 24.5; 4.3; 13.3\n  - Terms of trade (deterioration -): 7.2; -11.9; -5.0\n  - Nominal effective exchange rate (end of period): 2.8; -5.2; …\n  - Real effective exchange rate (end of period): 19.7; -1.1; (no value for 2013/14 provided)\n  - External current account balance, including official transfers (percent of GDP): -6.5; -6.0; -7.1\n  - Gross domestic savings (percent of GDP): 15.0; 16.0; 12.8\n  - Gross domestic investment (percent of GDP): 33.1; 33.0; 30.2\n  - Public investment (percent of GDP): 25.0; 24.6; 21.7\n  - Private investment (percent of GDP): 8.0; 8.4; (no value for 2013/14 provided)\n  - Resource gap: -18.1; -17.0; -17.4"
    },
    {
      "heading": "Economic outlook and risks",
      "content": "- 2014/15 budget plan targets the general government deficit at 3 percent of GDP and maintains a strong pro-poor focus.\n- Monetary policy anchored on base money geared toward maintaining inflation in single digits.\n- Public debt-to-GDP ratio expected to rise, reflecting large disbursements associated with implementation of investment projects under the Growth and Transformation Plan (GTP).\n- Downside risks identified by Executive Directors include:\n  - External financing of the public investment program\n  - Declining prices for export commodities\n  - Weather-related shocks"
    },
    {
      "heading": "Executive Board Assessment — findings and policy recommendations",
      "content": "- Commendations and findings:\n  - Directors commended authorities for delivering robust and broad-based economic growth, maintaining inflation in single digits, expanding employment, improving social indicators, and progress toward the Millennium Development Goals.\n  - Sustainability of public sector-led growth strategy seen as threatened by identified downside risks; shift toward private sector-led, sustainable growth recommended.\n- Fiscal policy recommendations:\n  - Continue fiscal prudence to achieve GTP goals while reducing crowding out of the private sector.\n  - Step up efforts to increase domestic revenue by broadening the tax base, improving customs and tax administration, and removing tax exemptions.\n  - Welcome planned implementation of a new high-level oversight mechanism to monitor public enterprises and contingent liabilities.\n  - Adopt a consolidated fiscal position as a more robust fiscal anchor and borrow within a comprehensive debt strategy.\n- Monetary and financial sector recommendations:\n  - Maintain monetary restraint in response to food and energy price shocks and domestic demand pressures from large public investments.\n  - Eliminate recourse to National Bank of Ethiopia (NBE) budgetary financing to help curb inflationary pressures.\n  - Strengthen liquidity management and monetary transmission through enhanced interest rate flexibility and adoption of a broader set of monetary policy instruments.\n  - Strengthen financial supervisory and regulatory frameworks to promote inclusion and encourage greater competition.\n  - Enhance private sector credit access by eliminating the requirement that commercial banks hold NBE bills.\n- Exchange rate and external sector recommendations:\n  - Improve export competitiveness by reducing overvaluation of the real effective exchange rate through enhanced exchange rate flexibility.\n  - Adopt a more market-based exchange rate to facilitate accumulation of foreign exchange reserves as a buffer against external shocks.\n- Structural reforms to support private investment:\n  - Develop a proper legal framework for public-private partnerships.\n  - Simplify requirements for opening a business.\n  - Strengthen investor protections.\n  - Improve trade logistics.\n- Data and governance:\n  - Continue improving data quality, including national accounts and financial sector statistics.\n  - Directors welcomed Ethiopia’s removal from the FATF blacklist and looked forward to completion of the agreed action plan."
    },
    {
      "heading": "Selected economic and financial indicators (highlights)",
      "content": "- GDP at constant prices (at factor cost), annual percent change: 8.8; 9.7; 8.2\n- GDP deflator, annual percent change: 34.3; 4.6; 7.3\n- Consumer prices (period average), annual percent change: 34.1; 13.5; 8.1\n- Consumer prices (end period), annual percent change: 20.7; 7.4; 8.5\n- Base money (annual percentage change): 0.4; 13.6; 16.7\n- GDP at current market prices (billions of birr): 739; 853; 995\n\nPress Release No. 14/458 — IMF Executive Board Concludes 2014 Article IV Consultation with the Federal Democratic Republic of Ethiopia (October 3, 2014).\n\n---\n\n\n References\n\n- The Federal Democratic Republic of Ethiopia and the IMF\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr14458"
    }
  ],
  "bullets": [
    "[Markdown version](/en/news/articles/2015/09/14/01/49/pr14458/index.md)",
    "[Structured JSON version](/en/news/articles/2015/09/14/01/49/pr14458/index.json)",
    "[Bundle manifest](/en/news/articles/2015/09/14/01/49/pr14458/bundle-manifest.json)",
    "Published: October 3, 2014",
    "On September 24, 2014, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Ethiopia.",
    "Ethiopia’s recent macroeconomic performance described as strong, with robust economic growth supported by higher agricultural production, and large public sector and foreign direct investments.",
    "Inflation remained contained in single digits; the fiscal stance at the general government level is described as cautious, though public enterprises continue to provide an expansionary impulse.",
    "General government budget execution in 2013/14 reflects conservative spending.",
    "Public enterprises continued to borrow heavily from the banking system and externally to finance investments.",
    "Government finances (selected ratios, percent of GDP)",
    "Tight monetary policy supported the NBE’s inflation objective in 2013/14.",
    "Base money increased by 17.5 percent in April 2014, driven mainly by:",
    "Money and credit (annual percentage change / percent of beginning period stock of broad money)",
    "Developments mixed: deterioration in the trade balance offset by net inflows on services and transfers.",
    "External sector indicators (annual percentage change / percent)",
    "2014/15 budget plan targets the general government deficit at 3 percent of GDP and maintains a strong pro-poor focus.",
    "Monetary policy anchored on base money geared toward maintaining inflation in single digits.",
    "Public debt-to-GDP ratio expected to rise, reflecting large disbursements associated with implementation of investment projects under the Growth and Transformation Plan (GTP).",
    "Downside risks identified by Executive Directors include:",
    "Commendations and findings:",
    "Fiscal policy recommendations:",
    "Monetary and financial sector recommendations:",
    "Exchange rate and external sector recommendations:",
    "Structural reforms to support private investment:",
    "Data and governance:",
    "GDP at constant prices (at factor cost), annual percent change: 8.8; 9.7; 8.2",
    "GDP deflator, annual percent change: 34.3; 4.6; 7.3",
    "Consumer prices (period average), annual percent change: 34.1; 13.5; 8.1",
    "Consumer prices (end period), annual percent change: 20.7; 7.4; 8.5",
    "Base money (annual percentage change): 0.4; 13.6; 16.7",
    "GDP at current market prices (billions of birr): 739; 853; 995",
    "[The Federal Democratic Republic of Ethiopia and the IMF](http://www.imf.org/external/country/ETH/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](https://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
  ],
  "alternates": {
    "markdown": "/en/news/articles/2015/09/14/01/49/pr14458/index.md",
    "json": "/en/news/articles/2015/09/14/01/49/pr14458/index.json",
    "bundleManifest": "/en/news/articles/2015/09/14/01/49/pr14458/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-26T20:53:00.096Z"
}