The International Monetary Fund Executive Board Concludes 2017 Article IV Consultation with the Federal Democratic Republic of Ethiopia

On January 12, 2018, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation1 with the Federal Democratic Republic of Ethiopia.

Ethiopia has recorded annual average GDP growth of about ten percent in the last decade, driven by public investments in agriculture and infrastructure. The poverty rate has fallen from 44 percent in 2000 to 23.5 percent in 2015/16. In 2016/17 GDP growth is estimated at 9 percent, as agriculture rebounded from severe drought conditions in 2015/16. Industrial activity expanded, with continued investments in infrastructure and manufacturing. The current account deficit declined in 2016/17 to 8.2 percent of GDP from 9.1 percent the previous year, reflecting lower drought-related imports and lower public sector capital goods imports. However, export revenues were largely unchanged despite significant volume growth, as global agricultural commodity prices remained low. Foreign direct investment (FDI) growth, was 27.6 percent due to investments in the new industrial parks and privatization inflows. International reserves at end-2016/17 stood at US$3.2 billion (1.8 months of prospective imports cover).

In October 2017, the National Bank of Ethiopia (NBE) devalued the birr by 15 percent relative to the U.S. dollar, thereby reducing overvaluation and enhancing competitiveness. Simultaneously, the NBE increased interest rates and adopted a restrictive stance to minimize adverse effects on inflation—which was 13.6 percent in November 2017. Since October 2016, the Ministry of Finance and Economic Cooperation (MOFEC) implemented further cuts in external borrowing by the government and public enterprises (SOEs), and reduced outstanding non-concessional commercial debt. The general government deficit outturn in 2016/17 was 3.4 percent of GDP (including privatization) and the 2017/18 budget speech announced additional consolidation policies, with the budget deficit projected at 2.5 percent of GDP.

Growth is expected to stay high in 2017/18, at 8.5 percent, supported by continued recovery from droughts and export expansion as new manufacturing facilities and infrastructure come online—offsetting the potentially dampening impact of restrictive macroeconomic policies. Over the medium term, growth is expected to remain around 8 percent, supported by sustained expansion in exports and investment. The authorities’ policies envisaged under the second Growth and Transformation Plan (GTP II) are expected to underpin domestic private sector development and FDI. The GTP II also envisages allocating significant resources to poverty alleviation and the social safety net, while efforts to strengthen financial inclusion are underway.

Executive Board Assessment

Executive Directors agreed with the thrust of the staff appraisal. They commended Ethiopia’s impressive record of human development improvements and output growth over the last decade, and the effective policy response to the recent drought. They noted that the preconditions for an export expansion and transition to private sector-led growth—including investments in trade-enhancing infrastructure—are in place, and private direct investment is growing strongly. However, they underlined that external imbalances and inadequate reserve buffers remain a key risk, and urged the authorities to maintain determined policy actions to control external borrowing.

Directors stressed the need to continue determined implementation of policies to reduce external imbalances. They commended the restrictive public sector borrowing policy to contain external debt and imports while protecting pro-poor spending, the devaluation of the currency to regain competitiveness, and the tight monetary policy to rein in inflation. They agreed that these policies should address most of the birr’s prior overvaluation, while ongoing reforms to strengthen the business environment will help preserve competitiveness gains. Directors welcomed the authorities’ readiness to tighten policies further if inflationary pressures do not abate in coming months. They noted that a more flexible exchange rate would help preserve competitiveness and foster export diversification, and recommended eliminating exchange restrictions.

Directors supported the authorities’ goal to strengthen domestic revenue mobilization and urged them to accelerate ongoing tax administration reforms. They welcomed plans to improve the management and oversight of public enterprises, including undertaking audits for some large state-owned enterprises (SOEs). Public-private partnerships (PPPs), long-term concessions, and privatization of SOEs could offer opportunities to fund critical infrastructure. Directors welcomed the progress in strengthening the legal framework for PPPs and urged the authorities to ensure that their use strikes the appropriate balance between boosting private sector participation and minimizing fiscal risks. Continued efforts to improve the business climate, promote financial inclusion, and improve governance will also be important.

Directors welcomed plans to develop a broader range of indirect monetary policy instruments and promote an active inter-bank market, which would deepen financial markets and improve savings allocation. They encouraged the authorities to continue to monitor the NPLs of the national development bank and to shift its current funding mechanism to a less distortive system. Directors also urged implementation of the action plan to further strengthen the AML/CFT framework.

Directors welcomed ongoing efforts to strengthen the compilation and dissemination of economic statistics. They urged the authorities to adopt international standards for budgetary, monetary, and financial statistics and decisively address remaining data weaknesses in national accounts and public sector financial reporting.

It is expected that the next Article IV consultation with The Federal Democratic Republic of Ethiopia will be held on the standard 12-month cycle.

Distributed by APO Group on behalf of International Monetary Fund (IMF).

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Humanitarian Situation in the Democratic Republic of the Congo Reaches Breaking Point as Funding Gap Remains Enormous

The humanitarian situation in the Democratic Republic of the Congo (DRC) has deteriorated dramatically over the past year due to a massive escalation of conflict and widespread insecurity. Extreme violence has spread to areas typically considered stable, such as the provinces of Kasai and Tanganyika. The situation has been recently compounded by deadly floods and an outbreak of Cholera, among multiple other health emergencies, while the IOM, the UN Migration Agency humanitarian appeal, released at the end of last year, remains vastly underfunded.

Some 4.3 million people are displaced throughout the DRC; 1.7 million of whom were violently forced to flee their homes in 2017. This recent spike of displacement has made the DRC the country with the highest number of internally displaced people in Africa. The majority of newly displaced people say that food is their biggest need and, in some areas, many of them have yet to receive any humanitarian assistance due to lack of funding.

In total, 13.1 million people will be in need of humanitarian assistance throughout the country in 2018. Children, young men, women and ethnic minorities have been among the hardest-hit. More than 4 million children under the age of five are at risk of acute malnutrition. Some 7.7 million people are expected to be impacted by the devastating effects of an acute food emergency, while 10.5 million have limited or no access to healthcare. An estimated 4.7 million women and girls will be exposed to gender-based violence (GBV) in crisis-affected areas in 2018.

“The humanitarian situation in the DRC is at breaking point as is our capacity to respond due to extremely limited funding,” said Jean-Philippe Chauzy, IOM DRC Chief of Mission. IOM is coordinating humanitarian activities in three of these provinces experiencing the highest levels of displacement: Kasai, North Kivu, and Tanganyika. “The stories that Congolese, who have been forced from their homes, are telling us are bone-chilling. They have been through so much already – torture, rape and murder of their loved ones – we cannot stand idly by as they suffer in silence.”

IOM is appealing for USD 75 million to urgently meet the growing needs of displaced Congolese and the communities hosting them in the eastern and south-central provinces of North and South Kivu, Tanganyika and the Kasai.

IOM’s interventions in 2018 will focus on the following sectors: Camp Coordination and Camp Management (CCCM), Displacement Tracking, Shelter and Non-Food Items (NFIs), Water, Sanitation and Hygiene (WASH), Health, and Protection, particularly responding to gender-based violence (GBV) and helping unaccompanied or separated children. CCCM, a core activity of IOM in the DRC, ensures equitable access to humanitarian assistance and protection for displaced people, improving their quality of life and conditions. It also includes an advocacy component towards durable solutions for displacement. Data from our displacement tracking activities are utilized by the whole humanitarian community in the DRC.

Since its release, only USD 3.5 million has been given towards IOM’s appeal and in 2017, only 47 per cent of the overall inter-agency Humanitarian Response Plan was funded. This means that vital programmes have been unable to start, leaving thousands of displaced people in need. A revised inter-agency Humanitarian Response Plan is set to be released this Thursday (18/01).

“Funding levels are at their lowest for many years, with DRC seeming to have “fallen off the map” for many donors, at a time when we are facing vastly increased humanitarian needs. This is a worrying trend that we hope does not continue throughout 2018. Around the world, displaced people have similar needs, whether it is shelter, health or protection, we need to see a similar level of funding to other crises, ensuring that the needs of displaced Congolese are met appropriately,” said Chauzy.

Distributed by APO Group on behalf of International Organization for Migration (IOM).

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Statement by Ambassador Jonathan Allen, Chargé d’Affaires, on the political situation in Libya and its impact on the Libyan people

Statement by Ambassador Jonathan Allen, Chargé d’Affaires, on the political situation in Libya and its impact on the Libyan people:

Delivered on: 17 January 2018 (Transcript of the speech, exactly as it was delivered)

Thank you Mr President.

And may I thank both Ghassan and Rina for your briefings here today. And a very warm welcome and thank you also to our briefer from civil society, Ms. Sharief, who set out some very powerful messages and set out very eloquently the importance of an inclusive peace process, including particularly women and youth, and actually it would be very helpful, perhaps as follow up to this conversation to hear anymore from UNSMIL on how they are integrating the gender perspective in their work.

Let me begin, Mr President, by welcoming the Special Representative Salamé’s update on the political process and reiterating the United Kingdom’s full support for his work.

In our statement of the 14 December, we in this Council urged all parties to support the political process in a spirit of compromise for the sake of the Libyan people.

This must include support for Special Representative Salamé’s efforts to secure consent to amend the Libyan Political Agreement and commitment to the sequencing of the UN Action Plan.

As Ms. Sharief highlighted, civil society has an essential role to play in ensuring the voices of the people are also heard during discussions on the future of their country.

All Libyans, regardless of their age, gender, or where they are from, must feel represented and understood by their political leaders. This will encourage Libyan’s to give their political leadership their support and build trust in the political process.

The greatest immediate need is the establishment of a more inclusive political platform. That is essential to create an executive better able to improve the security, human rights and economic conditions in Libya.

A more inclusive political settlement will also help build a context more conducive to preparation for elections. We welcome the Special Representative’s emphasis on ensuring the right conditions are in place ahead of elections, including the necessary political, legislative and security preparations to ensure their success.

Mr President,

The security situation in Libya remains of deep concern, as we saw from clashes at Mitiga airport on Monday. As we’ve said before, there can be no military solution in Libya. All parties must exercise restraint and express their support for national reconciliation. This must include reconciliation of the security forces.

Unified security forces under the command of the civilian government, which are representative of and work for all Libyans, will also enable the threat posed by extremist groups to be tackled in a sustainable way. It will help bring an end to the impunity of armed groups which are inextricably linked to the gravely concerning human rights situation.

Ungoverned spaces in Libya are creating the conditions for abuses and violations of international humanitarian law which take place against civilians, internally-displaced persons and migrants.

We fully support the work of the AU-EU- UN Taskforce in tackling slavery in Libya. We call on all parties that are suspected of committing, ordering, or failing to prevent such human rights abuses and violations to be fully investigated, and if found guilty, to be held to account for their actions. We also stand ready to consider the sanctioning of individuals involved in people trafficking in modern slavery.

We are also concerned by reported restrictions to civil and political freedoms and intimidation of civil society organisations, public servants, religious groups and national minorities, including recent attacks of Sufi Shrines and Amazigh representatives. These groups must be allowed to participate in Libyan society and the political process.

And finally Mr President, on the economic situation. This Council needs to continue to protect the Libyan people from economic hardship, including by supporting the restoration of the economy and the delivery of services across the country. We must act robustly against attempts to illicitly sell oil and establish parallel institutions.

We need to continue to ensure that sanctions measures keep up with the situation on the ground. This includes the work we have done to address fuel oil smuggling. But we should also be ready to rectify inadvertent consequences, such as addressing the depreciation of frozen Libyan Investment Authority funds – which remain frozen at the Libyan government’s request until their eventual return for the benefit of the Libyan people.

Mr President,

A stable, unified, inclusive government is the best way to improve the security conditions, the economic fortunes and human rights situation for millions of Libyans. It will also improve global peace and security and our ability to address the challenges of migration. We must continue to stand together in support of Special Representative Salamé’s efforts to achieve this. And we, like him, urge Libya’s political leaders to put their country first.

Thank you.

Distributed by APO Group on behalf of United Kingdom Foreign and Commonwealth Office.

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South Africa: New Head for Crime Intelligence Long Overdue

The Chairperson of the Portfolio Committee on Police has welcomed the announcement by the Minister of Police of a mutual agreement between the Minister and the suspended Head of the Crime Intelligence (CI), Lieutenant General Richard Mdluli, leading to him being relieved from his duty.

“Lieutenant General Mdluli’s discharge will enable police management to appoint a permanent leader with the requisite skills, energy and innovative plans to guide the division to deliver on its mandate. The stability brought by the appointment of a permanent leader is essential if the unit is to add value in intelligence-driven policing,” said the Chairperson of the Committee, Mr. Francois Beukman.

The Committee has since its inception questioned the continued gap in leadership caused by the lengthy suspension of the head of a critical unit such as CI. The long suspension of Richard Mdluli points to the challenge within civil service of long suspensions without conclusion of disciplinary processes – yet receiving a salary and benefits. “This systematic challenge is unacceptable and must be urgently attended to,” said Mr. Beukman.

Following the release of annual crime statistics, the Committee reiterated the need for a move towards an intelligence-led policing and the hope is that the appointment of a replacement will aid the focus towards intelligence-led policing. The Committee calls for the urgent initiation of the process to fill the vacancy.

Furthermore, the Committee notes the process outlined by the Minister to appoint the Head of the Directorate of Priority Crime Investigation (DPCI). It will be vital to appoint a high calibre candidate who will enjoy the confidence of the members of the DPCI but also of the public at large. “The fight against corruption and organised crime needs a talented individual with the necessary gravitas and leadership skills to ensure that the DPCI becomes more effective and professional,” said Mr. Beukman.

Mr. Beukman said the Portfolio Committee wants more detail on the new structure of regional commissioners that was announced by the Minister. “The Committee will need a comprehensive cost breakdown of the new structure and whether an extra management level will indeed bring value. If you have well-qualified cluster commanders and well trained and experience station commanders police stations must be able to perform.

The National Commissioner and his management team will appear before the Portfolio Committee on Police on Thursday, 1 February 2018 and will be engaged on these issues.

Distributed by APO Group on behalf of Republic of South Africa: The Parliament.

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