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© 2005 International Monetary Fund

January 2005

IMF Country Report No. 05/28

The Federal Democratic Republic of Ethiopia: Selected Issues and Statistical Appendix

This Selected Issues and Statistical Appendix paper for The Federal Democratic Republic of Ethiopia was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on August 26, 2004. The views expressed in this document are those of the staff team and do not necessarily reflect the views of the government of The Federal Democratic Republic of Ethiopia or the Executive Board of the IMF.

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INTERNATIONAL MONETARY FUND

THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

Selected Issues and Statistical Appendix

Prepared by a staff team consisting of A. Basu (Head), R. Powell, L. Erasmus and A. Yamauchi (all AFR); and Y. Sobolev (PDR) and T. Mattina (FAD)

Approved by the African Department

August 26, 2004

Contents

  • Basic Data

  • I. Introduction

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Ethiopia: Basic Data 1/

Area: 1,221,900 square kilometers

Population, 2004 estimate: 71.1 million

Population, 1993/94 - 2003/04 average annual growth: 2.8 percent

GNI per capita, World Bank Atlas method, 2002 estimate: US$100

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Sources: Ethiopian authorities; and IMF and World Bank staff estimates.

Beginning 1997/98, data pertain to the period July 8-July 7; prior to that, data pertain to the period July 1-June 30 except for money and credit.

Including special programs.

In percent of beginning-of-period broad money stock.

Including errors and omissions.

Public medium- and long-term debt, including to the Fund.

Before 1999/2000, post-debt relief; thereafter, pre-debt relief.

Before debt relief; on an accrual basis.

Contents

  • II. Assessing the Implications for Growth of Achieving the MDGs

    • A. Introduction

    • B. Sources of Growth

    • C. Assessing the Authorities’ MDG Growth Scenario

  • Text Figures

  • II.1. Sectoral Contribution to Real GDP

  • II.2. Contribution to GDP

  • II.3. Actual and Potential Output

  • II.4. Capital-Output Ratio

  • Text Tables

  • II.1. Estimating the Impact of Exogenous Variables on Real GDP

  • II.2. Contribution to real GDP Growth

  • II.3. Sources of Growth and Potential Real GDP Growth

  • II.4. Assessing Medium-term Real GDP Growth

  • III. Foreign Aid Inflows and the Issue of Dutch Disease

    • A. Theoretical Considerations

    • B. Empirical Evidence

    • C. Empirical Analysis

    • D. Conclusions And Policy Implications

  • Text Figures

  • III.1. Real Effective Exchange Rate vs. Aid Inflows

  • III.2. The Share of Ethiopia’s Noncoffee Merchandise Exports

  • III.3. Growth Rate of Ethiopia’s Noncoffee Exports and World Imports

  • IV. Structural Reform Priorities for Improving Fiscal Management in Ethiopia

    • A. Introduction

    • B. Fiscal Decentralization

      • Background

      • Efficiency gains from Decentralization

      • The block grant formula

      • Macro-fiscal stabilization following decentralization

    • C. Public Expenditure Management

      • Budget formulation

      • Budget execution

    • D. Revenue Administration

      • Tax administration

      • Customs administration

    • E. Conclusion

  • Text Figures

  • IV.1. Block Grant as a Share of Federal and Regional Spending, 1998/99–2002/03

  • IV.2. Block Grants from the Central to Regional Governments

  • Text Tables

  • IV.1. Expenditure Responsibilities Following Woredas Decentralization

  • IV.2. Regional Fiscal Operations as a Share of Consolidated Government

  • IV.3. Regional Fiscal Operations as a Share of GDP, 1998/99–2003/04

  • V. Financial Sector Development in Ethiopia

    • A. Overview of the Financial Sector

      • Banks

      • Nonbanks

    • B. Financial Sector Reforms

      • Commercial Bank of Ethiopia

      • National Bank of Ethiopia

      • Other banking reforms

    • C. Regional Comparison

      • Structure of financial sector

      • Financial market development

      • Financial soundness indicators

      • Prudential regulations

      • Financial sector reforms

    • D. Future Reforms

      • Banking sector

      • Nonbanks

      • Supervision

      • Judiciary system

  • Text Tables

  • V.1. Financial Sector

  • V.2. Monetary Survey

  • V.3. Financial Soundness Indicators

  • V.4. Interest Rate Developments, 1997/98–2002/03

  • V.5. Government Domestic Debt, 1992/93–2002/03

  • V.6. Structure of Banking System in the Region

  • V.7. Financial Market Development

  • V.8. Financial Soundness Indicators in the Region

  • V.9. Structure of Banking System in the Region

  • V.10. Financial Sector Reforms in the Region

  • Tables

  • 1. Gross Domestic Product by Economic Activity at Factor Cost, 1998/99–2002/03

  • 2. Expenditure on Gross Domestic Product at Current Market Prices, 1998/99–2002/03

  • 3. Estimate of Agricultural Production and Cultivated Area of Major Crops, 1998/99–2002/03

  • 4. Estimate of Coffee Production, Marketing, and Stocks, 1998/99–2002/03

  • 5. Monthly Export and Arrival Volumes and Coffee Prices, October, 2000–March 2004

  • 6. Approved Investment Projects, July 1992–January 8, 2003

  • 7. Prices of Petroleum Products, July 2001–December 2003

  • 8. Consumer Price Index, January 2002–May 2004

  • 9. Summary of General Government Finances, 1998/99–2002/03

  • 10. General Government Revenues and Grants, 1998/99–2002/03

  • 11. General Government Current Expenditures by Economic Classification, 1998/99–2002/03

  • 12. General Government Current Expenditures by Functional Classification, 1998/99–2002/03

  • 13. Summary of Regional Government Finances, 1998/99–2002/03

  • 14. Monetary Survey, 1998/99–2002/03

  • 15. Loan Portfolio of the Banking System, 1998/99–2002/03

  • 16. Sectoral Breakdown of Commercial Bank Claims on Nongovernment Sectors, 1998/99–2002/03

  • 17. Commercial Bank Lending and Deposits, 1998/99–2002/03

  • 18. Reserve and Liquidity Position of Commercial Banks, 1998/99–2002/03

  • 19. Structure of Interest Rates, 1998/99–2002/03

  • 20. Exchange Rate Developments, 1992/93-2002/03

  • 21. Balance of Payments, 1998/99–2002/03

  • 22. Exports, 1998/99–2002/03

  • 23. Imports, c.i.f., by End Use, 1998/99–2002/03

  • 24. Merchandise Trade Unit Values and Volumes, 1998/99–2002/03

  • 25. Recorded Imports by Country of Origin, 1998/99–2002/03

  • 26. Exports by Country of Destination, 1998/99–2002/03

  • 27. Public and Publicly Guaranteed External Debt Outstanding, 1998/99–2002/03

  • Appendix

  • 1. Summary of the Tax System as of end-December 2002