Government developing a system to regulate subsidies in economic sector

Addis Ababa, April 12, 2022 (FBC) – The Government of Ethiopia has announced that it is developing a system that would better manage subsidies to economic sector.

The country’s economy has continued to be dependent on subsidies being provided by the government over the past years.

In an exclusive interview with FBC, the Planning and Development Ministerr, Fitsum Assefa (PhD) said the government has been subsidizing particularly the basic commodities including the oil supply.

“Although subsidizing the economy is not a problem by itself, the country has been forced to face staggering economic situation due to budget deficit and the shift made by the government towards other areas of priority,” she said.

Despite the huge investment in oil, the government has faced a 120 billion birr deficit due to imbalances between the global price and local distribution. The government has also incurred unnecessary expenses due to subsidies for basic consumer goods, she added.

Fitsum also said that the government is seeking possible solutions mechanisms to ensure that citizens are benefiting from the subsidy.

Saying that it would not be easy to get out of the subsidy system swiftly, Fitsum noted that the Government is considering improving the system in the light of the fact that even citizens entitled to benefit from the subsidy might be negatively impacted by the process.

“If the government apt to sever the subsidy, realizing a market-led economy will remain to be the solution,” She added.