Ethiopia poll may hasten economy reform- W. Bank

By Katie Nguyen

NAIROBI, June 1 (Reuters) – A strong opposition showing in Ethiopia’s elections may spur the government to move faster on planned economic reforms to boost growth and fight poverty, a World Bank official said late on Tuesday.

“Major gains for opposition parties that campaigned on a platform of economic liberalisation in May 15 elections are likely to put pressure on the ruling party to speed up change, the bank’s country director for Ethiopia Ishac Diwan said.

“I’m sure they (the government) would accelerate on that now. Obviously, they are under pressure,” Diwan said in a telephone interview from Ethiopia’s capital Addis Ababa.

“I think the elections are a big part of it. It opens the era of a political age, it improves the investment climate and it increases the level of dialogue.”

Provisional results from the parliamentary polls show a tenfold rise in opposition seats, although Prime Minister Meles Zenawi’s Ethiopian People’s Revolutionary Democratic Front (EPRDF) has won enough seats to win a third term.

The main opposition coalition accuses Meles of authoritarianism and of failing to lift Ethiopia, consistently ranked as one of the world’s least developed countries, out of a chronic cycle of poverty.

They favour creating jobs by freeing up the state-controlled economy through privatisation and reforming state ownership of all land, Ethiopia’s greatest asset.

The government insists the state must own land, arguing it gives more security to farmers, but has taken steps towards easing state control from other sectors such as banking.

Meles has pledged to target double-digit growth in the coffee-growing country over the next five-year term. However, the International Monetary Fund expects the largely-agrarian economy to grow by 5.7 percent this year and 4.6 percent in 2006.

“We do expect growth to go up,” Diwan said, estimating annual growth of 6-7 percent.

HIGH GROWTH

“To reach consistent double-digit growth, I think would take more effort especially in the private sector, attracting foreign investments, getting several of these new industries going… and having a more credible agricultural policy,” he said.

“Another two years of effort with the potential scaling up of international assistance, I hope we will get into a more sustainable path of very high growth,” Diwan said.

Donors pump about $2 billion in annual budget support to Ethiopia, which over the past two years has started to carry out some reforms to privatise certain sectors, such as banking.

But with more than 80 percent of the 72 million population living in rural areas, agriculture still drives the economy and represented about 40 percent of 2002/03 gross domestic product.

Typically, a season of poor rains or drought has an immediate and damaging effect on economic growth.

Diwan said the government had boosted farming by giving incentives to farmers to double or triple output, buy better seeds and fertiliser and give them access to micro-credit.

However, these reforms needed to be scaled up, he said.

“All this has been planned and some elements are moving, and I think this really needs to be accelerated,” Diwan said.