By Kirubel Tadesse
A senior IMF official says the Ethiopian government's economic growth forecast of 15 percent annually over the next five years looks overambitious.
The Ethiopian federal parliament last week endorsed a five-year economic plan that envisages doubling the economy in the period by growing it at 11 percent annually, or indeed up to 15 percent.
Ragnar Gudmundsson, IMF Resident Representative in Kenya, told journalists in Nairobi that using China’s growth as a benchmark might be unrealistic.
"I don't want to speculate about Ethiopia's economy from here, but in a poverty reduction program such as Ethiopia's, that is a bit inflated," Gudmundsson added advising that both ends - 11 or 14.5 percents-growths needed to be toned down.
Gudmundsson said similar ambitious forecasts were being announced by some Sub-Saharan African governments such as Kenya’s projecting annual growth of 10 percent in its Vision 2030 plan to transform itself into a middle income economy.
Gudmundsson however stressed that IMF remains ‘optimistic’ that Africa will enjoy economic growth as strong as 6 percent in 2011 and could top booming Asian economies in pace.
According to Gudmundsson it is far more important for these countries to aim for a sustained growth rate of 6-7 percent that can absorb external shocks, such as slowdowns in developed economies or aid cuts. He also named diversification as another important objective for African countries.
In October the IMF projected Africa’s overall growth to be close to 6 percent in 2011.
Gudmundsson warned that achieving this depended in part on Africa maintaining the relative peace and stability that has allowed it to record significant growth in the recent past. He noted that with 17 out of the 44 African countries holding elections across the continent next year, there might be cause for concerns about stability and government overspending: “sometimes you have some of the discipline that goes out of the window.”
Gudmundsson spoke to African journalists participating in a Thomson Reuters Foundation financial reporting course conducted last week in Kenya’s capital Nairobi.
