Ethiopia takes strong economic measures to address COVID-19 impact

Addis Ababa, April 30, 2020(FBC) -The Government of Ethiopia has been taking tough economic measures to save lives and ensure quick recovery from the adverse effects of COVID-19, according to Ministry of Finance.

Finance State Minister Eyob Tekalgn said making available 15 billion birr to private banks to enable them provide debt relief and additional loans to their customers are among the measures.

The Council of Ministers has also passed a set of economic measures that support firms to keep their employees and survive through these difficult times, and expedite the country’s economic recovery.

“The economic measures include cancellation of taxes owed to the Ministry of Revenues; and taxes that are due to audit finding between the Ethiopian years 1997 and 2007. The council has decided to forgo this debt all together,” he said.

Eyob added that his ministry will set detailed guidelines and directives for implementation and follow up.

“As for the tax of firms in the time line between the Ethiopian years 2008 to 2011, the decision made is to cancel the interests and penalties as well as to allow the firms pay their taxes in the scheduled time frame. In doing so, they can pay 25% of the tax and the remaining sum in an installment basis during the course of a year,” he elaborated.

He further pointed out that the government will make 10% deduction for firms that pay their full tax at once. Property tax cut measures are also introduced to encourage firms to keep their employees in payroll.

With regard to salary income tax, “firms are allowed to withhold four-month salary tax of employees, provided they are affected by the pandemic. So if a firm is paying salary to its employee without gaining income due to Coronavirus, the government will allow the firm to withhold its income tax contribution for four months,” the state minister elaborated.

Other economic measures include finance disbursement to encourage Small and Medium Enterprises (SMEs) and provision of additional liquidity to microfinance institutions to avail credit.

The economic measures also take into account farmers’ cooperatives so as to ensure the smooth and uninterrupted supply chain that is fully intact, Eyob said, adding that “to support that role the government has decided to provide additional liquid in terms of loans, amounting 1.5 billion birr.”

The measures will have paramount importance to encourage and support firms to continue operating and ensure quick economic recovery when the pandemic is over, he observed.

All the above “were tough decision, and required serious deliberations as they cost the government greatly,” the state minister stressed.

He urged firms to act responsibly and pay their dues, according to ENA.