Press Release No. <a name="P16_75"></a>05/249

An International Monetary Fund (IMF) staff mission led by David Andrews, Assistant Director in the African Department, issued the following statement on October 25, 2005 in Addis Ababa:

"An IMF staff team visited Addis Ababa between October 11-24 to conduct the regular Article IV consultation discussions with the Ethiopian government.¹ The discussions focused on the short-term economic outlook and policies, and the challenges associated with achieving substantive poverty reduction through reaching the Millennium Development Goals (MDGs) by 2015. The mission also met with representatives of civil society, the business community and Ethiopia's international partners.

"The IMF team welcomed the government's continued commitment to maintaining macroeconomic stability, which they consider to be key for achieving high and sustained rates of growth. In this regard, the government expressed concerns that the recent surge of world oil prices had led to a widening of external current account. The IMF team supported the authorities' view that the envisaged increase in public spending for productive infrastructure was important for accelerating growth. However, this spending could put further pressures on the balance of payments unless additional foreign financing was identified. Similarly, the large volume of public outlays could lead to an acceleration of prices. The team was encouraged by the government's assurances that measures would be taken as needed to counterbalance such pressures.

"The IMF team concurred with the government's view that increased external support was required to achieve the MDGs. This said, the team stressed the need to complement the on-going expansion of infrastructure with reforms to foster private sector development, including the financial sector. In the fiscal area, reforms should focus on actions to boost revenue collections and to strengthen public expenditure management.

"The IMF's Executive Board is expected to discuss the staff's report on this mission in late 2005 or early 2006. With the consent of the government, the report could be published on the IMF's website."

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¹ According to Article IV of the IMF's Articles of Agreement, all member states are entitled to receive regular visits to discuss economic trends and policies.