The state of the economy

The state of the economy

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Ethiopia is classified as being among the least developed countries in the world. Its economy, structurally deficient and backward, has been declining during the past seventeen years. In 1989, the Gross Domestic Product at constant prices was Br12.36billion (US$5.97billion at previous rate). Recent estimates show that since 1987/88, the GDP has been on a continuous decline, with a record fall in 1990/91 where it declined by 5.6%. Agriculture plays a dominant role in the economy, with a contribution to GDP estimated at 38.8% in 1989.

The population is rising fast with the rate of increase accelerating over time. By the end of 1992, the population had reached approximately 52million, with an annual growth rate of 2.9%. By the year 2000 the population is expected to reach 68million. GDP per caput, having failed to return to the pre-drought level (1984) of around Br230, has settled on a plateau of about Br220 (US$106 at previous rate1).

During the last decade, Ethiopia has been a low-inflation country, i.e. about 5% per annum, notably as a result of its prudent fiscal policy. However, in 1990/91 inflation was estimated to be in excess of 10%.

From 1974/75 to 1988/89, imports have increased at an average rate of about 8% per annum, while exports achieved a growth rate of only 1.4% per annum, mainly through stagnation of agricultural exports. The resource balance has therefore shown an increasing deficit.

As a result of the policies of the past several years and the internal problems, the Transitional Government of Ethiopia (TGE) inherited a shattered economy in June 1991. Much of the industrial production had come to a standstill, while essential infrastructure had been destroyed. About half of the total population would now fall under accepted poverty thresholds.

In November 1991, the TGE adopted a new economic policy by replacing the centrally planned economy with a market-based economy. In October 1992, the currency was devalued to Br5 per USdollar, as part of an integrated programme of economic reform. The devaluation is expected to provide new incentive to export at the official exchange rate, and to stimulate economic development.

They must know, then, that the above-named gentleman whenever he was at leisure (which was mostly all the year round) gave himself up to reading books of chivalry with such ardour and avidity that he almost entirely neglected the pursuit of his field-sports, and even the management of his property; and to such a pitch did his eagerness and infatuation go that he sold many an acre of tillageland to buy books of chivalry to read, and brought home as many of them as he could get.

But of all there were none he liked so well as those of the famous Feliciano de Silva’s composition, for their lucidity of style and complicated conceits were as pearls in his sight, particularly when in his reading he came upon courtships and cartels, where he often found passages like “the reason of the unreason with which my reason is afflicted so weakens my reason that with reason I murmur at your beauty;” or again, “the high heavens render you deserving of the desert your greatness deserves.”

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