Following consultations with Ethiopia under Article IV of the IMF’s articles of agreement the IMF released a staff report and other documents on 30 October 2015.
Ethiopia’s recent economic performance has been strong, with economic growth of around 8.7% in 2014/15, including growing manufacturing and construction sectors. Growth in the medium term is estimated to be 7.5% to 8%. However there are challenges to competitiveness from credit and foreign exchange constraints.
The IMF staff recommends strengthening the tax administration to increase revenue. The report also suggests that a more effective tax system could raise more resources. The tax to GDP ratio in Ethiopia was 12.9% in 2014/15 which means that Ethiopia is collecting well below the tax that could potentially be raised. Measures to increase the tax base, such as promoting private sector growth and increasing the coverage of commercial agriculture, could support the initiative to increase revenue.
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