ETHIOPIA: PRESIDENT GIRMA PROMISES CONTINUED

UNCLAS SECTION 01 OF 02 ADDIS ABABA 002425 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: PGOV ECON EAGR ET SUBJECT: ETHIOPIA: PRESIDENT GIRMA PROMISES CONTINUED ECONOMIC GROWTH, CONTROLLED INFLATION AND FREE AND FAIR ELECTIONS REF: 2008 ADDIS 2802 Summary -------------- ¶1. (U) On October 5, Ethiopian President Girma Woldegiorgis presented the Ethiopian Government's (GoE) parliamentary agenda at the opening of the joint session of the House of Federation (HoF) and the House of Peoples' Representatives (HoR). In traditional fashion, it was a short laundry list of accomplishments from the previous year such as achieving rapid development, controlling inflation, and easing the foreign currency shortage. The President presented objectives for the upcoming year such as continued economic growth, social development, resolution of power shortages, inflation control, and upgrading of health and education services. He promised that next year's parliamentary elections would be carried out in a peaceful, democratic and credible manner that would ensure the active participation of the public and the different political parties. The President glossed over the serious food security issues currently facing the country, and completely failed to mention the Civil Society Proclamation (CSP) that is forcing thousands of NGOs to re-register prior to February 2010. He also made no mention of contentious national security concerns such as Somalia, Sudan, or tensions with Eritrea. End Summary. Sixth Year of Economic Growth Despite Global Crisis -------------- -------------- ¶2. (U) In a twenty-minute speech on October 5, Ethiopian President Girma Woldegiorgis presented the government's agenda to a joint session of the House of Federation (HoF) and the House of Peoples' Representatives (HoR). He emphasized Ethiopia's ability to register six consecutive years of annual growth rates of more than 10 percent despite the global economic crisis (Note: The IMF estimates 7 percent GDP growth in 2008-9). The country achieved this success in spite of power shortages which put severe strains on industry. In addition, the country maintained this growth while controlling inflation. The President did acknowledge that not all of last year's objectives were met and that the goal of maintaining an annual 25 percent growth rate in exports was not achieved. He attributed a 10 percent decrease in exports to limitations on marketing systems coupled with falling global trade and commodity prices. He added that imports continued to grow substantially, leading to an imbalance in demand and supply on foreign exchange trade. To address these challenges, the government took remedial measures including the devaluation of the birr. With 10 Percent Goals for Seventh Year -------------- ¶3. (U) Continuing on the economic theme, the President laid out the economic objectives for the coming year, promising continued economic growth at a rate of more than 10 percent for the seventh consecutive year, while controlling inflation at less than 10 percent. (Note: Average inflation for August was 24 percent.) The government will also renew its goal of registering 25 percent or more annual growth in export trade. These goals will be achieved by implementing polices that were successful last year such as strict control on government budget deficits, balancing the growth of the money supply, and taking measures to correct some of the market failures observed last year. The President predicted that the completion of most of Ethiopia's ongoing power projects will alleviate many of the power shortage problems experienced in the past year and speed up industrial development. Peaceful and Democratic National Elections -------------- ¶4. (U) President Girma spent a significant amount of time in his speech highlighting the importance to be paid to the Fourth National Election which will be conducted in a "peaceful, democratic and credible manner" in 2010. He promised the active participation of the public, an internationally recognized election code of conduct, and a mechanism for dialogue among different political parties to resolve problems arising in the election process. He ADDIS ABAB 00002425 002 OF 002 announced that parties would have opportunities to use government media and would be given budget subsidies. National and international observes will also be invited to participate in the election process. He added that the government would be prepared to take the necessary legal action to prevent any unlawful and unconstitutional acts during the election process. And Health and Education Services Complete the List -------------- -------------- ¶5. (U) The President made brief passing mention of the goal of strengthening "ongoing social development activities" including ensuring quality education as well as expanding and upgrading basic health services. In the education area, he pledged to ensure quality education in regular, technical, vocational and higher educational institutions by engaging and widely mobilizing those in the education sector as well as families of students. Other than a short mention of the late start and early departure of the Kiremt rains in some parts of the country, and of the need to ensure continued growth in agricultural development, the President did not discuss the serious food security issues currently facing the country. He also failed to mention other important social issues such as the Civil Society Proclamation (CSP) that is currently forcing dozens of NGOs to re-register prior to February 2010. Comment -------------- ¶6. (SBU) President Girma's presentation to Parliament was true to its traditional form. It was a laundry list of simplified and slightly overstated economic accomplishments of economic growth. Although post questions the reliability of the GoE's growth figures given the poor harvests, flat export growth, and severe power outages in the past year, economic growth of even seven percent is indeed an achievement. Reducing year-on-year inflation to the single digits was an accomplishment, but is mainly a testament to the fact that annual inflation was exorbitantly high (64 percent) in July of 2008. Average annual inflation remained at 24 percent in August 2009 and the purchasing power of the local currency is declining, as prices have not declined from 2008 and the Birr continues to be devalued. ¶7. (SBU) Comment Continued. The fact that President Girma devoted a substantial portion of his speech to the national elections and to how the public and political parties would be enabled to fully participate in the democratic and electoral process was noteworthy. Whether these promises will be born out by action will only be clear in the coming months, but evidence to date is not encouraging as political space afforded to opposition parties and their ability to organize, open offices, field candidates, or meet with their constituencies has been persistently narrowed over the past year. MUSHINGI