As global crude prices continue to drop, many African countries that rely on crude imports are experiencing some relief on their current accounts. Ethiopia, one of the fastest growing economies in the continent is among those benefiting.
The rapidly growing Ethiopian economy seems to be taking advantage of the global drop in crude prices.This economy has now got opportunities of allocating the foreign currency that was supposed to be used to to pay for imported gas to other development sectors.
“All the endeavors that this country is involved at this moment in time requires huge imports.so any marginal benefit in terms of fiscal space coming from a lower import bill would have positive external to all the other endeavors that the country is involved.” Getachew Tekelemariam, Economic analyst
As any other economy however the slash in crude prices brought no reduction in commodity prices.
” Associating directly the reduction of oil to the price of other commodities has its own flaws.On the one hand the price of any commodity defined by the supply and demand factors.so if you are considering all the consumers use in this country for their livelihood .Part of the coast might be oil but a large proportion of it is defined by the supply and demand factors.” Getachew Tekelemariam, Economic Analyst
Even the transport sector which is directly linked to oil and gas, has not transfered the benefit of lower prices on air travel tickets as well as on bus or taxi fares.
” Governments always try to make use these things to take a revenue advantage to use it
to other investments.So basically since your consumer expectation remains similar instead of just reducing it to a level that reflects the reduction in oil prices and then try to adjust your policies accordingly, the best thing is to actually make use of the revenue that you generate Because of the marginal reduction in oil to expand your fiscal space,your budgetary space and use it for other activities.” Getachew Tekelemariam, Economic Analyst
For the Ethiopian economy which has lots of mega projects now under way, the lower crude prices will continue to be a rather good news. This is becuase the economy can get the relevant strength to shoulder any project in the nation .But apart from general national benefits, it’s still not the time to see for instance low prices of daily commodities for the citizens.
