Ethiopia: Highlight of the medium-term performance of GTP II

Recently, the National Plan Commission presented an badessment of the medium-term performance of Ethiopia's second five-year Growth and Transformation Plan. As a result, while the government has forecast economic growth of 11% in 2015/16 and 2016/17, the country has reached 8 and 10.9% respectively over the two fiscal years, an average of 9.5%. This means that real economic growth over the last two years is less than the 1.5% plan.

As a result, the agriculture, industry and services sectors have seen growth average of 4.5, 19.7 and 9.5% respectively. Regarding the Commission's report, agricultural value added has not reached the target due to the drought caused by El Nino in 2016 and unrest in parts of the country over the past three years. years.

The small and medium-sized enterprise sector was one of the main sectors that received due attention during the preparation of GTP II, as it was thought that this would facilitate economic and structural transformation. The sector had a projected growth of 21 and 21.3 percent in the budget years mentioned above respectively. Unfortunately, due to the various factors mentioned below, it was not possible to comply with the plan as only 2.5% and 2.8% growth was recorded in the sector respectively. And the main factors attributed to this weak growth are the fact that small and medium-sized manufacturing industries that use agricultural products as inputs have not developed to the desired level.

By the end of 2017, the country's economy was estimated at Birr 1,807 trillion, and per capita income reached $ 863. The main sources of economic growth were the expansion of domestic investment and the growth of private consumption.

Although encouraging results were recorded in terms of national savings, the gap between domestic savings and investment was still 14.9%. This shows that there is an urgent need to increase the influx of investments to the country to overcome the shortage of capital in achieving the objectives of GTP II

Foreign Trade (export) showed a low level of performance due to the decline in the international price of coffee. and gold. However, exports of horticultural products, livestock and meat products showed encouraging results. The main difficulties identified in the export sector are illegal export chains, the poor quality of exportable products and smuggling.

The contribution of total investment to economic growth was 2.5 and 3.2% respectively in 2015/16 2016/17. Total consumption also contributed to growth of 13.8 and 11.3% respectively in the two fiscal years.

It was also noted in the report that to improve citizens' savings culture, it is vital to create new savings mechanisms.

Although private sector participation is increasing from time to time, there are still gaps in investment in the productive sectors that are essential for transformation.

During the fiscal year 2016/17, Government expenditures reached 329.3 billion Birr and increased by 17% over the previous year. The budget deficit during this period was 60.2 billion birr. In fact, a budget deficit of 33.5 billion Birr was recorded during the first six months of the fiscal year.

The government has planned to check the level of inflation at a single-digit level during GTP II. As a result, the government achieved its GTP II plan since general inflation was 9.7% and 7.2% over the last two fiscal years.