By ARGAW ASHINE ( <javascript:void(0);> email the author)
Posted Thursday, August 16 2012 at 01:00
The Ethiopian government has suspended the provision of foreign currency in
a decision that has been linked to the political uncertainties surrounding
Prime Minister Meles Zenawi's deteriorating health.
A notice to this effect has been issued by the regulator, the National Bank
of Ethiopia, to the country's commercial banks as Addis Ababa also appealed
for food aid.
According to Agriculture minister Mitiku Kassa, the number of aid recipients
was 3.2 million over the last six months, and have now increased due to the
failure of rain in some parts of the country.
The country's foreign currency reserves are running alarmingly low and can
only cover the importation of basic goods such as petroleum, medicine and
food. The measure is likely to lead to a black market boom that would
further weaken the country's import-export trade, observers say. Banking in
the Horn of Africa nation of about 85 million people is highly centrally
regulated.
Industry insiders say massive capital flight and illegal transactions are
the main reasons for the rapid depletion of forex reserves. One of the
fastest growing sub-Saharan Africa countries, Ethiopia's growth has touched
seven per cent annually for the last nine years, according to the IMF.
Big businesses owned by Mr Meles' ruling Ethiopian People's Revolutionary
Democratic Front (EPRDF) play a key role in the daily operation of the
economy. The EPRDF owns banks, insurance firms, manufacturing and
construction giants, hotel chains and media outlets among the more than 85
companies under the Endowment Fund for the Rehabilitation of Tigray.
The EPRDF is a coalition of four largely ethnically-based political parties,
with the Tigrayan People Liberation Front (TPLF) - representing Tigrays, who
make up less than five per cent of the population - running the show and
providing the power base for Meles and his government.
Mr Meles, a Tigray, has been absent from the public eye for two months due
to an undisclosed illness, fuelling speculation of an internal power
struggle his absence.
Government officials refute this and say the long-serving premier would
resume office soon. However, the government has to date failed to provide
proof that he is alive. Ethiopia has lost $11.7 billion to outflows of
ill-gotten gains between 2000 and 2009, a recent Global Financial Integrity
report says.
"That is a lot of money to lose to corruption for a country that has a per
capita GDP of just $365. In 2009, illicit money leaving the country totalled
$3.26 billion, doubled the amount in each of the two previous years," part
of the report reads.
About $194 million in cash or 314 metric tonnes of food is needed for the
next four months.
Forty-one per cent of the hungry as located in the Ethiopian-Somali region
and the rest in Oromiya, Southern and Amhara regional states.
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Received on Thu Aug 16 2012 - 11:13:30 EDT
