Ethiopia says drought to have no im­pact on GDP growth

Kuwait Times - - BUSINESS -

AD­DIS ABABA: Ethiopia has kept its eco­nomic growth forecast at 10 per­cent for the 2015/16 fis­cal year de­spite a drought, its fi­nance min­is­ter said, adding it was af­fect­ing agri­cul­tural ar­eas only and he did not ex­pect to di­vert re­sources from the bud­get to re­spond to it. Failed rains dur­ing both the spring and sum­mer have had dev­as­tat­ing con­se­quences for the Horn of Africa na­tion, cre­at­ing food and wa­ter short­ages. The gov­ern­ment and aid agen­cies say Ethiopia needs $600 mil­lion to cope with the cri­sis.

Al­though it has some of the high­est eco­nomic growth rates in Africa, Ethiopia’s econ­omy still de­pends heav­ily on rain-fed farming, which em­ploys some three-quar­ters of the pop­u­la­tion of more than 90 mil­lion.

Ethiopia’s fis­cal year starts on July 8. “Re­gard­ing the im­pact on eco­nomic growth, the drought af­fected ar­eas are pe­riph­eral and pas­toral com­mu­ni­ties in the southern and east­ern parts of the coun­try,” Fi­nance Min­is­ter Ab­du­laziz Mo­hammed told Reuters in an in­ter­view.

“Nor­mally, those parts of the coun­try con­trib­ute not more than 5 per­cent to our GDP. On the other hand, we ex­pect har­vest to be more this year.” Ab­du­laziz said the gov­ern­ment will not di­vert funds from other projects in its bud­get to deal with the drought.

“The gov­ern­ment has im­me­di­ately re­sponded to the hu­man­i­tar­ian cri­sis and so far we have been able to con­trol the im­pact of the drought,” he said. “But we have not yet di­verted any re­source from our de­vel­op­ment projects. We have been do­ing it from our own re­serves. We don’t ex­pect any di­ver­sion.”

Ear­lier this week, the United States Agency for In­ter­na­tional De­vel­op­ment (USAID) an­nounced a do­na­tion of $97 mil­lion for Ethiopia to help feed more than 8 mil­lion peo­ple in need of aid be­cause of the drought. It said its sup­port in­cluded more than 154,000 tons of emer­gency food aid to help about 3.5 mil­lion peo­ple in Ethiopia, in­clud­ing refugees from South Su­dan, So­ma­lia and Eritrea. Aid agen­cies have said the num­ber of those need­ing sup­port could to rise to 15 mil­lion peo­ple by early 2016 af­ter the drought, which has been ex­ac­er­bated by the El Nino weather ef­fect.

El Nino, which is marked by warm­ing sea-sur­face tem­per­a­tures in the Pa­cific Ocean, causes ex­tremes such as scorch­ing weather in some re­gions of the globe and heavy rains and flood­ing in oth­ers. Me­te­o­rol­o­gists ex­pect El Nino to peak be­tween Oc­to­ber and Jan­uary.

The United Na­tions has said 350,000 chil­dren are ex­pected to re­quire treat­ment for acute mal­nu­tri­tion in Ethiopia by the end of 2015. The Ethiopian gov­ern­ment said it would start dis­tribut­ing 222,000 tons of wheat this month and plans to im­port an ad­di­tional 405,000 tons if the scale of food short­age does not ease. Ad­dis Ababa has al­lo­cated more than $190 mil­lion for the emer­gency. — Reuters

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