The basic data table presented at the beginning of this paper updates economic performance through FY99. However, the data for FY99 are mainly preliminary estimates made by Fund staff in consultation with the authorities. Most other statistical tables at the end of this paper are updated through FY98 only, or the year of most recently available data. More recent data are provided on consumer prices, exchange and interest rate developments, and the monetary accounts.
See Tables 1-10 at end of this report on the real sector and prices.
An unofficial cease fire, which had been observed by both sides since mid-June 1998, ended in February 1999 when hostilities flared up again in the disputed Badme region. To date, attempts at peace mediation by the United Nations, the Organization for African Unity, and several third countries have been unsuccessful. Current estimates place the number of causalities on both sides at 50,000 (with 15,000 fatalities). In addition, around 400,000 people have been displaced in Ethiopia by the conflict. Furthermore, a number of Eritrean nationals or Ethiopians of Eritrean descent have been expelled from the country.
In Ethiopia, public saving and investment refer to the general government only, which comprises the federal and regional governments.
In view of the SDPs and the government’s effort to reorient capital expenditure toward areas with higher social rates of return, the drop in public investment in FY98 is partially related to lingering shortcomings in implementation capacity (i.e., poor budget planning, including accounting for recurrent costs over the medium term; lack of coordination both between donors and the Ministry of Economic Development and Cooperation, and between the ministry and regional and zonal agencies, which now implement more than one-half of the total capital budget). Moreover, heavy rains in the first half of the that year affected the government’s ability to undertake new spending. In FY99, problems related to implementation capacity have persisted. Furthermore, donor concerns about the security situation have arisen, which has led to shortfalls in external financing.
See Tables 23-30 at end of this report on the external sector.
Foreign direct investment is likely being understated in the balance of payments, as the National Bank of Ethiopia has only recently launched an annual survey of this activity.
All arrears and maturities due to Russia and non-Paris Club creditors between 1997 and 1999 are expected to be subject to restructuring in 1999/2000.
See Tables 11-15 at the end of this report on the Fiscal accounts.
Defined as total revenue (excluding privatization receipts) less total expenditure and net lending (excluding cash interest payments and foreign-financed expenditure).
The highest marginal tax rate on income from agricultural activities was lowered from 89 percent to 45 percent, but the tax bracket subject to the highest marginal rate was raised from Br 6,001 a year to Br 50,001 a year. Similarly, the annual income threshold subject to the lowest marginal rate (10 percent) was raised from Br 600 to Br 1,200.
See Tables 16-22 at the end of this report on monetary accounts and interest rate and exchange rate developments.
The nongovernment sector is defined as credit to the public enterprises (financial and nonfinancial), cooperatives, and private firms and households.
For further details, see Section II of this paper.
Excess liquidity is defined as the ratio of liquid assets (cash on hand, reserves at the NBE, and demand deposits with other banks) to net current deposits (demand, savings, and time deposits less uncleared checks paid, uncleared foreign effects, and deposits at notice (i.e., that can be withdrawn after 30 days’ notice)) in excess of 15 percent of net current deposits. For a discussion of the factors contributing to the highly liquid balance sheets of Ethiopian banks, see Section II below.
As of end-April 1999, commercial banks held only 2 percent of total assets in the form of treasury bills. Excluding the CBE, the ratio of treasury bills to total bank assets was 0.7 percent.
The exception is a floor on the savings deposit rate—currently 6 percent—which continues to be set by the National Bank of Ethiopia.
On civil service reform, see Section III of this paper.
On privatization, see Section IV of this paper.