Why is Eritrea's Economic Boom Being Ignored by the IMF?
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| In a sign of a growing economy, even rural Eritrean towns are experiencing new development projects. Picture: Tesseney, Eritrea |
Why is Eritrea's Economic Boom Being Ignored by the IMF?
These days, it's hard to deny Eritrea's economic boom. With gold production in the Koka and Zara mines set to commence, and the Bisha mine producing copper, it's easy to see why the Economic Intelligence Unit (EIU) believes Eritrea will have the 3rd fastest-growing economy in Africa and the tenth fastest in the world in 2014.
Perhaps a telling sign of the country's fast growth is the rise in multi-million dollar infrastructure projects being developed. Some of these projects include the constructions of two modern colleges in Mai Nefhi and Hamellamo; Dahlak Kebir's Master Plan project worth US$115 million; construction of 1,680 modern homes and shops in Asmara; and similar housing projects in other cities that are slated to start next year.
But not everyone believes Eritrea's economy is growing at these impressive rates. The International Monetary Fund (IMF) seems to think the country's economy is barely growing. This year the bank foretasted the country's GDP to grow by a measly 1.1% and for 2014, it's only marginally better at 1.9%.
For most Eritreans, these low figures are surprising. To try to make sense of it, some observers have suggested since Eritrea is the only African country to reject IMF loans, that these low figures are intended to discourage other developing countries from making similar moves. While this claim may certainly be playing a factor, the most plausible explanation has to do with one Ethiopian man.
Abebe Aemro Selassie, who formerly worked for the Ethiopian government, is the Deputy Director in the IMF’s African Department who is also tasked with providing the IMF's Regional Economic Outlook for sub-Saharan Africa. In essence, he is the man who is providing these GDP statistics for Eritrea and Ethiopia. Not surprisingly, since starting his job, GDP forecasts for Eritrea have been very low, while those for Ethiopia have been very high.
Abebe's influence isn't confined to the IMF. These statistics are cited by a number of economic professors, journalists and by the World Bank. In a competitive global economy, this could influence potential investors down the line from seeking to do business in Eritrea if they read these biased forecasts and conclude the economy is struggling even while producing expensive minerals to the international market.
To allow a former Ethiopian government official to work for IMF's Regional Economic Outlook is a glaring case of a conflict of interest to say the least. Abebe's hiring only underscores why the Eritrean government is right in keeping its distance from a bank long known for shackling developing countries into crippling debt.
Despite these politically motivated forecasts from the IMF, Eritrea is a country where all the stars appear to be aligning at the same time, and the East African nation could be set to be one of the biggest African economic success stories of this decade.
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| Abebe Aemro Selassie is a former Ethiopian government official who is tasked with providing IMF's economic statistics for Eritrea and sub-Sahara Africa. |
Why is Eritrea's Economic Boom Being Ignored by the IMF?
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