Economist Intelligence Unit Country Report – Ethiopia

Monthly Review: April 2011

• Opposition parties claimed that more than 200 members were arrested during March to prevent attempts at organising demonstrations against the government.

• There are crucial differences between Ethiopia and the African countries that have overthrown their long-time rulers in 2011; Ethiopia has a much smaller middle-class, inferior levels of education and much lower Internet penetration.

• The government adopted a more aggressive stance against Eritrea in March by calling for the removal of the regime of the president, Isaias Afewerki, although the motives behind the increase in rhetoric are not yet clear.

• The state-owned Development Bank of Ethiopia has started to sell new government bonds, but with an inflation rate of 16.5% in February, the real interest rate on the bonds is negative and demand will probably be low.

• UK state aid for Ethiopia is planned to rise to an annual average of £331m (US$533m) up to 2015, making the country the biggest recipient of British aid.

• Interventionist policies such as the limit on bank lending, currency devaluation and price ceilings have created market distortions, leading to shortages of staple products, and may eventually cause more pain than gain.

Read the full report here.