Gov’t implementing multi-pronged strategy to rein in inflationary pressures: Finance State Minister

Addis Ababa, March 12, 2024 (FBC) – The Government of Ethiopia has been taking monetary, fiscal and development policy measures that stabilize inflation, Finance State Minister Eyob Tekalign said.

According to him, the government is enforcing stringent budgetary discipline on government institutions for the remainder of the Ethiopian fiscal year, ENA reported.

“Our budget is constrained with high demand and limited resources,” Eyob said, adding “this compels institutions to optimize cost, enhance efficiency and find innovative solutions with fewer resources.”

In tandem with this, the National Bank has implemented reforms restricting large transactions, capping bank lending at 14% annual growth to curb money supply, and regulating government borrowing rates.

Loan dependence is aggressively cut with direct government borrowing limited to one-third of the previous year’s level through deficit reduction efforts, the state minister elaborated.

Combating food price inflation is a central priority, according to Eyob.

“The key lies in producing goods in large quantities and ensuring well-regulated market distribution, which undoubtedly brings about positive pricing changes,” he stressed.

Therefore, increased budgetary allocations are targeting productive agricultural sectors, while the Homegrown Economic Reform Agenda aims to streamline the business environment and distribution efficiencies.

While initially challenging, the policy actions are gaining encouraging traction, the state minister noted, pointing out “price stability and significant reductions in some sales, while prices remain stable in others.”

Yet, the inflationary buildup necessitates a measured, long-term strategy, he said.

With regard to product price reductions, Eyob revealed that regulatory bodies are directed to robustly monitor against unjustified price hikes.

“If civil servants, leaders and businesses prioritize curbing inflation, stable price can be attained for improved economic conditions nationwide,” he stated, reiterating the government’s resolute commitment to this agenda through monetary, fiscal and development-driven interventions.”

Recall that Prime Minister Abiy Ahmed, while addressing the 28th regular session of the House of People’s Representatives, said the government’s preventive measures against inflation have yielded promising results.

According to him, inflation was reduced to 28.5 percent from the previous 30 percent. This achievement is regarded as a positive beginning, and there are high expectations for further improvements this Ethiopian fiscal year.