Public Policy Trajectories for Managing the Current Account Crises RL Vol XII No 310 MMXVIII

Public Policy Trajectories for

Managing the Current Account Crises –

Ethiopia: an exploratory think piece

Public Lecture - RL Vol XII No 310 MMXVIII

Costantinos Berhutesfa Costantinos, PhD

Professor of Public Policy & Sustainable Institutional Reforms

https://addisababa.academia.edu/CostyCostantinos

Abstract

In recent years, public investment has been one of the major drivers of economic growth in Ethiopia. Government spending has doubled in just the last three years and quadrupled in the past six years. For the five-year GTP period as a whole, the sum of budgetary government spending and off-budget spending by public enterprises is programmed to reach Birr 1.26 trillion, or an average of 41% of GDP per year over five years. Ethiopia now has the highest capital expenditure share in government spending in Africa. This means that much more spending is being funnelled to capital projects and to capital equipment, rather than to recurrent expenditure (wages, operational and maintenance costs). The public investments planned for the coming five years can be seen as putting in place the necessary hardware and software needed for a modernising economy. Though Ethiopia current account balance (% of GDP) fluctuated substantially in recent years, it tended to decrease through 1997 - 2016 period ending at -11.4 % in 2016.

Strategic corporate planning is affected by competence in government’s economic management, the efficiency of the public service bureaucracy, the attitudes of influential public figures towards entrepreneurship, and the quality of public infrastructure and services. A case in point is the commercial farm sector where half a million hectares lay bare. A major paradigm shift in the management of the economy is a necessary condition, looking for new business strategies and approaches that are consistent with market economies accommodating changes whenever they take place and be able to convert such developments into opportunities to redefine their position and purpose. After passing through about four decades of economic policy crises in which it has been subjected to anti-private sector polices, Ethiopian entrepreneurs are in the early stage of revival and has not as yet regained its prominence in national development. An assessment of the private sector shows that the formal private sector is quite small with average employment figure of less than ten people per enterprise. Most depend on outdated and obsolete technology characterised by frequent breakdowns and low productivity. Hence, the discussion points improvement in public policy and strategy, fiscal & monetary management, increased import substitution and exports, and re-balancing the trade deficit.

Key words: public policy, fiscal & monetary strategy, import substitution and exports, re-balancing the trade deficit

See lecture here or   https://www.academia.edu/37858670/Public_Policy_Trajectories_for_Managing_the_Current_Account_Crises_Ethiopia_an_exploratory_think_piece