Government urged to strengthen private sector

The International Monetary Fund (IMF) and the World Bank have urged the Ethiopian government to strengthen the private sector in the economy.

In a review of the country's Poverty Reduction Strategy Paper they also called for more agricultural development. But they said that the current policies and analysis in the strategy paper should "result in substantial progress in Ethiopia's fight against poverty".

Although they described the poverty reduction targets as ambitious, they said these were achievable. The IMF and the World Bank review added that the government's agricultural-led development was "well tailored to Ethiopia's conditions".

The poverty reduction strategy was drawn up to tackle the entrenched poverty in Ethiopia, where at least half of its 65 million people live on less than US $1 a day.

The IMF also urged the government to use the strategy paper as an "evolving" work in progress rather than as a blueprint. The IMF also welcomed the input of local communities and non-governmental organisations on the preparation of the strategy paper but added: "The principal drawback was that consultations served mostly to provide reactions to the government's existing policies and programmes rather than to craft new ones."

The openness of consultations, the IMF said, was "almost unprecedented" in Ethiopia and the government had not exerted any influence.

The IMF, in the joint assessment of the strategy paper with the International development Association (IDA) acknowledged that the country was often hit by severe droughts, and that historically the government had always exercised an interventionist policy on the economy.

The IMF and IDA added that the scale of the development challenge in Ethiopia was "almost unparalleled", given its population and a per capita income of $100, one of the lowest in the world.