Ethiopia: Govt Needs to Intensify Measures On Enhanced Production to Lower Inflation – Scholars

Addis Ababa — The government should intensify measures on enhancing production and productivity to reduce the prevailing inflation, scholars said.

Prime Minister Abiy Ahmed told members of the parliament that the government is undertaking various measures to reduce inflation such as subsidizing fertilizer and fuel.

In an exclusive interview with ENA, Senior Economist and President of African Chamber of Commerce Kibur Gena said that the government should give due attention to reduce the internally generated inflation through increasing production and productivity.

“One of the area or entity that has pushed the inflation rate higher are also banks which tend to lend actually to companies like real estate or those that focus on consumption; which makes it difficult for the manufacturing or agriculture sector to increase its production and make it available on the market. So there are combinations of government and banks that have role in creating inflation but at this moment we see both the banking institutions and the government trying hard to restrict the circulation of money in Ethiopia,” he elaborated.

In the advent of limiting cash circulation to lower inflation, financial institutions should be cautious of its essentiality, Kibur pointed out.

The senior economist emphasized the need to ensure sustainable peace and create business enabling environment in order to attract Foreign Direct Investment (FDI) thereby ascertaining the desired economic growth.

However, the senior economist noted that economic growth would be difficult unless the government devises means to increase its foreign currency revenue by minimizing foreign exchange black-market.