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Ministry studying 50 mega projects for private partnerships

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The Ministry of Finance and Economic Cooperation (MoFEC) announced 50 potential projects for (MoFEC) Public-Private Partnerships (PPP). They are currently undergoing detailed study with support from the World Bank Group (WBG).

Haji Ibsa, Communication Director for MoFEC told Capital that finishing structural and legal frameworks for PPP were one of the things the Ministry was most successful in this past fiscal year.

“Among the 50 projects, 26 are in the final stages and international bids will be announced soon,” Haji said.

“Contract performances in Ethiopia are among major problems we face,” Haji expressed during the press briefing at the Ministry. “Lack of enough research prior to starting a project and less bargaining power costs the government.”

The director exemplified the low performance of the Metals and Engineering Corporation (METEC) with a fertilizer factory it took on 2012 with USD 540 million. China National Complete Plant Import & Export Corporation (COMPLANT) offered USD 730 million to complete the project within 5 years. METEC proposed to finalize the project within three years. Haji pointed out that this is a huge difference that should have been more thoroughly researched.

COMPLANT oversaw the design, manufacture, supply, transportation to site, site preparation, installation, supervision, commissioning, training of personnel and other responsibilities at the YAYU Industrial Complex.

“The complex was supposed to be finished long ago but the performance is below 50 percent,” he said. “The contract also has defects including making clear who is responsible for the deficient work,” said Haji.

The past 12 months witnessed continuous inflation which challenged the economy, according to the report.

In the last fiscal year, export earnings showed a USD 78.9 million decline (2.8%).

Imports increased by USD 24.6 billion compared to the same period last year. In the 2016/17 fiscal year the total paid amount for imports was USD 30.1 billion which increased to USD 55.5 billion.

The federal government’s income in 2017/18 was at 76.1% in comparison with the plan. In the last fiscal year, the government was able to generate 108.6 billion birr from tax and non-tax revenues, while the plan was to generate 237 billion birr.

Due to the high budget deficit, the Ministry postponed some mega project payments until the next fiscal year, according to Haji. The 2017/18 fiscal year saw a 53.8 billion birr budget gap which is going to be transferred to the current fiscal year.

Tax revenue has not grown at the pace of economic development which has pushed the government to look for loans to fill the budget gap. The report shows such actions affect the private sector especially when it comes to obtaining loans.

The ministry hopes to increase revenue by improving tax policy.

“There are going to be tax reforms in the coming fiscal year,” according to the report.

Audit gaps, loans, and excessive expenditures were listed reasons for the poor fiscal performance and marked as critical problems to be addressed.

Another issue was funding for youth programs.  In the past fiscal year, 7.8 billion birr was transferred to youth but not every region used all their funding, according to the report.

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