[stop-imf] IMF Closes Shop in Ethiopia

[robert weissman]

http://allafrica.com/stories/200803250614.html

Ethiopia: IMF Closes Shop

Addis Fortune <http://www.addisfortune.com/> (Addis Ababa)

25 March 2008
Posted to the web 25 March 2008

Tamrat G. Giorgis
Addis Ababa

Forced to bridge 400 million dollars in budget deficit, the
International Monetary Fund (IMF) is closing shop in 30 countries across
the world, including in Addis Abeba, some sources disclosed. However, it
will only be IMF's office here that is due to be closed in Africa.

The news was delivered to the resident representative, Arnim
Schwidrowski, three weeks ago, through a video conferencing, according
to these sources. Mr. Schwidrowski was not available for comment because
he has left for Washington D.C.

Ethiopia is a founding member of the IMF, an international finance
organization incorporating 185 countries created in 1945, together with
the World Bank. These two organizations were known as Bretton Woods
Institutions. Unlike its sister organization which engages in
development and poverty reduction projects, the IMF focuses on
macro-economic stability and the finance sector.

Housed for many years in the same building where the World Bank is
found, Werbek Building, in Africa Avenue, the IMF has maintained its
office in Addis Abeba since it was re-opened in June 1993, following the
fall of the military government in 1991.

Its latest office, located in Heritage Plaza, on Cameroon Road (in front
of Bole International Hotel),has maintained a modest staff of an average
six and has provided technical assistance to the Ethiopian government,
in areas of macro-economic management. It has also conducted surveys of
the finance sector.

"We no longer have a program with them," said a government official.

After having suspended programmes to Ethiopia in the early 1980s for a
decade, the IMF began its re-engagement with the Ethiopian government
with its unpopular Structural Adjustment Facility, worth 49.4 million
dollars. This was followed by a three-year Extended Structural
Adjustment Facility (ESAF); although the total programme was designed to
provide Ethiopia with 88.4 million dollars, the total amount provided
was only 29.4 million dollars divided into two disbursements. In 2001,
the IMF signed an agreement of 148 million dollars with Ethiopia, in
order to implement a two-phase programme on Poverty Reduction and Growth
Facility (PDGF). This came to an end in 2007.

IMF claims modest success from its programmes in Ethiopia, including in
its contribution to boosting the country's international reserve from a
little over 200 million dollars in the early 1990s to over 1.2 dollars
this year; average tariff reduction went from 230pc during the Derg time
to 35pc now. It attempted to persuade the government to create a
competitive environment in the local finance sector as well as to
introduce a market-oriented foreign exchange market.

IMF has claimed the reputation during its years in Ethiopia for pushing
the Ethiopian government to liberalize the financial sector, and allow
foreign interests to participate in equity contribution. This was one of
the demands that put the Fund at odds with the government, for it was a
demand never met by the latter.

There has not been any further programme since the end of PDGF, although
consultations were held under Article IV. A government official
disclosed that the IMF's decision to close its office here has yet to be
officially communicated to the government. Sources, however, told
Fortune that senior government officials have been informed of the
decision by the Resident Representative.