ADDIS ABABA: The International Monetary Fund (IMF) has called on the Ethiopia government to implement new efforts to boost the country's private sector or face a slowdown of economic growth. The global financial body said that the East African country's economic growth is expected to slow to a still positive 6.5 percent this year and could see it continue to slow if there is not more private sector investment in infrastructure. An economic advisor to the government here told Bikyamasr.com that “we are taking this seriously and already have a number of projects in the works that will help boost the private sector in the very near future.” Economic performance was “mixed" in the 12 months to July 7, with “strong, broad-based growth" of 7 percent, the IMF said in an e-mailed statement to Bloomberg news agency this week. “Inflation averaged 33 percent in the same period,” according to the statement. Growth will be 6.5 percent in the medium term without an “increased role of the private sector to leverage the large public infrastructure investment, and efforts to improve the doing business conditions," the IMF said in the statement. Africa's second-most populous nation encourages foreign investment while the state dominates or monopolizes industries such as telecommunications, banking and power generation. The government this fiscal year will invest 144 billion birr ($8billion), or about 16 percent of gross domestic product, in industrial development, transport, telecommunications, energy and housing, according to a five-year growth plan. “With several large projects expected to be financed either fully or partially from domestic sources, we have cautioned against crowding out of the private sector, which will slow down growth," the IMF's representative in Ethiopia, Jan Mikkelsen, said in a previous email. A reduction in central bank lending to the government has helped slow inflation, which the IMF expects to average 14.4 percent in the 12 months through July 7, 2013, Mikkelsen said. “Closer scrutiny" is needed of the state-owned Commercial Bank of Ethiopia's exposure to public enterprises and its growing market share as the country's biggest bank, as well as the “adverse impact" of a requirement for other banks to buy central bank securities, the IMF said.
