Addis Ababa, Ethiopia - The International Monetary Fund (IMF), global financial body, projected that the Ethiopian economy growth will slow to 6.5 percent in this fiscal year unless there’s more private-sector involvement in infrastructure projects.

The IMF statement released on October 1 indicated that an increased role of the private sector to leverage the large public infrastructure investment and efforts to improve the doing business conditions that: “Real GDP growth will slow down to 6.5 percent in 2012/13 and over the medium term,” the statement explained. However, the Ethiopian government projects the economy will grow at double digit rates.

The NBE directive that requires commercial banks (excluding CBE) to hold bills issued by NBE is impeding financial intermediation. By creating a significant maturity mismatch in the private bank’s balance sheets, has a considerable negative impact on their capacity to play their conventional intermediation role. Financial sector soundness indicators do not point to immediate concerns. However, recent developments such as the increasingly dominant market share of CBE and its growing exposure to large public enterprises, and the adverse impact of NBE directives on private banks suggest a need for a closer scrutiny of the banking system. Read more

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