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