UAE to give Ethiopia $3 billion in aid and investments

Ethiopian Prime Minister Abiy Ahmed arrives in Khartoum for an official visit to Sudan on May 2, 2018. (AFP)
Updated 16 June 2018

UAE to give Ethiopia $3 billion in aid and investments

  • UAE pledges a total of $3 billion in aid and investments to Ethiopia
  • The UAE will deposit $1 billion in Ethiopia’s central bank to ease a severe foreign currency shortage

ADDIS ABABA: The United Arab Emirates pledged a total of $3 billion in aid and investments to Ethiopia on Friday, an Ethiopian official said, a major show of support for the new prime minister, Abiy Ahmed.
The UAE will deposit $1 billion in Ethiopia’s central bank to ease a severe foreign currency shortage, government spokesman Ahmed Shide told Reuters at a palace in Addis Ababa after Abiy met with Abu Dhabi’s crown prince, Sheikh Mohamed Bin Zayed.
No officials briefed journalists, but the UAE and its Gulf allies, in particular Saudi Arabia, regularly give large sums to cooperative governments in the broader region.
In 2013, the UAE was one of three Gulf monarchies that pledged a total $12 billion to the new government after the military ousted a president from the Muslim Brotherhood.
Abiy, a 41-year-old former intelligence officer, took up his position office in April after three years of unrest that had threatened the EPRDF coalition’s hold on power.
The coalition’s choice of Abiy, from an ethnic group that has long been marginalized, signalled its willingness to allow some political reforms, but he has already gone farther and faster than most had expected.
Two weeks ago the government said it would sell stakes in its lucrative telecoms monopoly and other assets including the national airline.
It also pledged to end a war with long-time enemy Eritrea, offering to implement a peace deal signed in 2000.
Last weekend Abiy visited the UAE’s ally, Egypt, and offered a newly conciliatory tone in a long and bitter row over a dam Ethiopia is building on the Nile, which Egypt fears threatens its water supplies.
Abiy had traveled to both Abu Dhabi and Riyadh shortly after taking office.
Shide said the UAE’s pledges would have a “significant impact” on Ethiopia’s foreign currency shortage.
Despite showing the fastest growth in Africa for the past decade, the landlocked country of 100 million people is heavily dependent on imports.
A hard currency crunch caused partly by spending on big infrastructure projects has reduced foreign currency reserves to less than one month’s worth of imports, according to analysts’ estimates. Foreign investors and local businesses say all sectors of the economy have been hit.
Abiy said in April that the government’s plans to continue expanding its infrastructure and the nascent manufacturing sector meant the currency crisis might last for 15 or 20 years.
A Ethiopian foreign ministry official said the other $2 billion from Abu Dhabi would be invested in tourism, renewable energy and agriculture.
On Friday afternoon, Abiy got behind the wheel of a white car and personally gave Sheikh Mohamed, the de facto leader of the United Arab Emirates, sitting in the passenger seat, a tour of Addis Ababa.
Shide said the crown prince’s delegation included investors interested in real estate and hospitals.

Saudi Arabia’s 2019 budget boosts spending by 7%

Updated 1 min 35 sec ago

Saudi Arabia’s 2019 budget boosts spending by 7%

  • Spending projected to hit $295 billion next year
  • Analysts expect ‘gradual’ pickup in non-oil economic growth

RIYADH: Saudi Arabia plans to increase state spending by more than 7 percent in 2019, according to a budget released by the Finance Ministry on Tuesday.

Spending is projected to rise to 1.106 trillion riyals ($295 billion) next year, up from an actual 1.030 trillion riyals this year, Saudi state television quoted the budget as saying.

The move is seen as an effort to boost economic growth, which has been hurt by low oil prices, which have plummeted more than 30 percent since October. 

“We believe that the 2019 fiscal budget will be focusing on supporting economic activity – investment and wider,” Monica Malik, chief economist at Abu Dhabi Commercial Bank (ADCB), told Arab News. 

“The continuation of the handout package will be positive for household consumption by nationals. We expect to see some overall fiscal loosening in 2019, which should support a further gradual pickup in real non-oil GDP growth.”

Malik said the government spending projection in the 2019 budget is in line with earlier official indications. 

A pre-budget statement in September, the first of its kind in Saudi Arabia, predicted next year’s budget would be SR1.11 trillion.

The Kingdom has run a budget deficit since 2014 as a slump in oil prices lowered state income. Saudi Arabia aims to balance its budget by 2023.