|
Since 1992, Ethiopia has embarked on structural reform
programs aimed at reorienting the economy from command to market
economy, rationalizing the role of the state, creating legal,
institutional and policy environment to enhance private sector
development. The overall policy environment focused at
liberalization of prices and markets, removal of subsidies,
reduction of tariffs and liberalization of external current account
convertibility. All these measures have also been supported by
favorable fiscal and monetary policies.
Macro
economic policy
Macro-economic policy creates favorable environment to
bring about rapid and sustainable economic growth along with macro
economic stability to build a national economy competitive in the
world market.
Macro economic stability is one of the basic determinants
of the development activities of a country. The major indicator of
the macro economic stability in a country can be evaluated from the
perspective of inflation rate, interest rate and foreign exchange
rate. Regarding these indicators, Ethiopia’s macro economic status
can be assessed, as stable due to less fluctuating inflation rate,
low interest rate and for the foreign exchange rate is relatively
stable and commensurate with the value of the foreign currency to be
exchanged.
Fiscal policy
Fiscal policy focuses improving the government revenue
base, in developing a stringent and transparent system of revenue
use and in supporting social and economic development and crating a
stable macro economic environment. On the expenditure side, the
government has introduced prudent practices on the use of its budge
and ensures that its use mainly focuses in priority sectors such as
agriculture (food security). Natural resource, roads, education,
health, power and telecommunications
On the revenuer side, the government has been taking
various measures to increase government revenue by further
broadening the tax base, strengthening the tax administration system
and creation of awareness among tax payers.
Monetary and
Exchange rate policies
These polices are mainly organized towards achieving low
inflation and inflation and liberalization of the external current
account and the need to foster export diversification and rebuild
net foreign assets to amore comfortable level.
In accordance with the overall monetary policy objectives,
monetary policy tools will be used to ensure that stable and market
determined exchange rate prevails and monetary policy contributes to
stable macroeconomic environment. It also improves banking services
by strengthening the capital and managerial capacity of private and
government banks, building the internal dynamics of banks and
fostering the contestability of markets with in the banking sector.
Trade policy
For various reasons the government of FDRE has formulated
explicit policies to regulate trade. The policy reform measures
embrace devaluation of the Birr, introduction of weekly foreign
exchange auction of trade.
The trade policy of the country has its own goals. The
policy creates favorable country’s economy in the world market; to
the competitiveness of the country’s economy in the world market; to
obtain sufficient amount of foreign exchange, to support the
country’s economic development activity, to establish a trade
infrastructure development and stab macro economy, to build a
marketing infrastructure that will provide maximum efficiency in
service deliver, to improve trade information system, to improve and
revise trade regulations and rules and to improve the marketing
infrastructure through expansion of standardization and
establishment of commodity exchanges.
Liberalization of the trade regime is driven by the aim of
integrating Ethiopia in to the global market for goods and services.
Following this objective, import tariffs have been progressively
reduced and the payments and exchange regulations for foreign trade
in goods and services have increasingly been liberalized.
Sectoral
Policies
Agricultural
Development led Industrialization
The country is endowed with large potentially cultivable
land and a large number of populations. The strategy that aims at
achieving fast economic growth normally focuses on raising the
employment of labor and intensive utilization of land while
economizing on the use of capital on the one hand and enhancing the
productivity of labor and land aimed at capital accumulation on the
other. In this regard, agriculture plays a leading role in the
growth of the country’s economy and it has to be made
internationally competitive and part of its production has to be
oriented towards export. It is seen as a long-term strategy to
achieve faster growth and economic development by making use of
technologies that are labor consuming but land augmenting, such as
fertilizer and improved seeds and other traditional practices.
Moreover, to bring about economic and social development with
respect to rural and agriculture led strategy, the government gives
special emphasis to the promotion of export products in kind,
quality and quantity.
Collaboration with the regions, works to allocate land for
commercial farming, make sure that there exist adequate
infrastructure facilities and streamlines to make efficient land
lease procedures for entrepreneurs who wish to set up large-scale
commercial farms. For those who want land and take-part in
agricultural activities, the Federal government, again in
collaboration with the regions, will work out an efficient
arrangement, which will safeguard the interests of all bodies
concerned.
| 