 ECONOMY |
 Economic Recovery Assistance |
In July 1991, when the Transitional Government took office, the economy was in a state of crisis caused by protracted civil war, recurrent drought, and the misguided economic policies of the defunct regime. The Government confronted the economic problems of the country and formulated a policy to reorient economic activity toward the market mechanism and limit the role of the public sector in economic activities.
The Government's economic policy was published in Ethiopia's Economic Policy During the Transitional Period (November 1991). The following excerpt from this document lists the steps to be taken by the state to encourage private capital participation:
"Create enabling conditions for the participation of both domestic and foreign private capital in various economic activities without any capital limitations;
"Remove all existing bureaucratic procedures and red-tape and introduce new laws and regulations and enforce them to enhance domestic and foreign private capital participation;
| "Provide incentives and encouragements to promote domestic capital participation; encourage a wider participation of private foreign capital.
The state will work out a comprehensive package of incentives for domestic and foreign private capital participation;
"Provide special encouragements to communities participating in economic development free from state interference."
International assistance was provided to Ethiopia during this crucial period. The Government organized a multi-donor funded Emergency Recovery and Reconstruction Program of approximately US$700 million, and reached agreement with the International Monetary Fund and the World Bank on the scope of a longer-term reform program. This agreement opened the doors for Ethiopia to the Special Program of Assistance for Africa and to the Paris Club.
In November 1992 the Consultative Group met in Paris under the Chairmanship of the Director, Eastern Africa Department of the World Bank. The Government's delegation was led by the Minister of Finance. The meeting was attended by delegations from Canada, Denmark, Finland, France, Germany, Italy, Japan, Netherlands, Sweden, Switzerland, united Kingdom, United States, African Development Bank, Commission of the European Communities, European Investment Bank, International Monetary Fund and United Nations agencies. The delegates commended the Government for the progress made in establishing the climate and conditions for economic and social recovery and for taking important steps on the road to fundamental reform.
Donors indicated that they would commit an additional US$1.2 billion between November 1992 and June 1994 in support of Ethiopia's reform program. |
