23 December 2012

Ethiopia: World Bank Releases U.S.$4 Billion Over Four Years

Ethiopia is to receive four billion dollars, under the new World Bank's Country Partnership Strategy (CPS), for the 2013 to 2016 fiscal years, where a specific allocation for the two outer years of the CPS is not available.

The World Bank officially introduced the CPS during a workshop held with government officials, ambassadors and people from the private sector, at the Sheraton Hotel, on Wednesday, December 19, 2012.

The new strategy has two main pillars, with governance as the foundation and gender and climate change as cross cutting themes.

The first pillar, "Fostering competitiveness and employment", aims to supportEthiopiain increasing agricultural productivity. It will also aid job creation, by improving competitiveness in manufacturing and services, whilst maintaining a stable macroeconomic environment.

The second pillar aims to support the country in improving the delivery of social services and developing a comprehensive approach to social protection and risk management.

"This partnership document is yet another testimony to the strong and longstanding collaboration between the Bank andEthiopia," said Sufiyan Ahmed, minister of Finance & Economic Development (MoFED).

Trust on the Ethiopian side is well reflected on the World Bank's CPS, which highlights increased competitiveness and productivity, increased and improved delivery of infrastructure, enhancing resilience and reduced vulnerability, stated Sufiyan.

The Bank's disbursement forEthiopia, in the 2011 fiscal year, reached 730 million dollars, which is also one of the highest disbursement rates for the Bank on the African continent. The Bank has close to six billion dollars in commitments for 27 projects, of which roughly 2.4 billion dollars is still undisbursed.

The partnership strategy document states that, althoughEthiopiahas shown positive developments, important challenges have emerged during the last few years that may require the government to adjust some of its policies. Enabling the country to move to a higher growth trajectory may require attention to several challenges, including ensuring macroeconomic stability and addressing the persistently high volume of poor individuals. The lagging quality of social services and the weak capacity of the public sector are also areas that need to be looked into.

"As with the previous Country Assistance Strategy, the CPS is a results-based strategy, anchored in the government's Growth and Transformation Plan (GTP), as well as the World Bank Strategy for Africa," said Guang Z. Chen, World Bank country director forEthiopia.

During the GTP period, a total of 75.4 billion Br budget deficit will be financed. 50.6 billion Br will come from domestic borrowing and 24.4 billion Br from external borrowing.

The CPS puts particular emphasis on supporting the government agenda in enhancing competitiveness and employment generation, as one of the key pillars of the CPS, according to Chen.

The lending program, for the first two years of the CPS, has been designed with a buffer of about 19pc, which is 2.7 billion dollars to allow for responsible delays on individual operations.

Most attendees of the workshop welcomed the new project.

"I congratulate the World Bank for the new strategy to supportEthiopiain various ways," said Eleni GabreMadhin, the former CEO of Ethiopia Commodity Exchange (ECX), leading the discussion on the launch of the CPS. "The World Bank should foster a closer link between academia and the policy engine," she went on to recommend.

The last World Bank Country Assistance Strategy (CAS) forEthiopia, originally covering 2008-2011, was extended by one year to cover the 2012 financial year. This extension was due to the slower than expected implementation of CAS activities, in addition to allowing more time to undertake a necessary poverty diagnostic.

The CPS was endorsed by the World Bank's executive directors, on September 25, 2012.

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