First Nine Months Report for 2005/06 Fiscal Year
The third quarter macroeconomic development report presents brief highlights on the developments of major macroeconomic variables during the first nine months of the 2005/06 fiscal year. The economic variables monitored on third and a nine months basis includes prices, Federal Government Fiscal Performance, Monetary Aggregates, External Sector, Public Debt, Manufacturing and Private Sector Developments. The exposition in this report dwells on variations of variables in both absolute and relative terms against the same period of the previous fiscal year.
As of march2005/06, the country level general consumer price index calculated on 12 months moving average bases stood at 12 percent which is 140 percentage point above the same period of last years’ inflation. This is mainly due to the increase in the food inflation by 14.2 percent, which was only 5.4 percent in the third quarter of 2004/05 fiscal year and the rate of cigarettes & tobacco also stood at 7.2 percent which was –12.3 percent in the same period of previous fiscal year. The rate of house rent, construction material, water, fuel, & energy and personal care & effects also recorded a double-digit inflation rate during third quarter of 2005/06.
In the daily interbank foreign exchange market, the official exchange rate of Birr against USD depreciated by 0.34 percent in the third quarter of the fiscal year 2005/06, comparing to the same period of the previous fiscal year while the parallel market rate of Birr against USD increases from 8.6961 to 9.1280 in the period under review. This means it is depreciated by about 5 percent. The difference between the official and parallel exchange rate increased from 0.04 to 0.44 during the period under review.
During the first nine months of the fiscal year 2005/06, total Federal Government Revenue including Budget Support amounted to Birr 10860.0 million, showing a decrease of Birr 623.8 million or 5.4 percent over the same period of the preceding fiscal year, owing to a decrease in direct budget support inflow. Looking at the spending side, a total of Birr 15635 million Federal Government Expenditure was made, showing Birr 1526 or 10.8 percent increase compared to the same period of the previous fiscal year. This is mainly owing to the 15.4 percent increased in capital expenditure disbursements and 18.5 percent regional transfer. The overall fiscal outturn resulted in a budget deficit of Birr 2149.7 million.
With regard to monetary aggregates the net foreign assets position of the country decreased from 13895.9 million Birr at the end of July 7, 2005 to 12582.3 million Birr on March 30th 2006. However, domestic credit increased by 17.5 percent due to a rise in both claims on other sectors and on government. This resulted in an increase in Broad Money by 9.5 percent over the amount on July 7, 2005.
Spanning the same period of 2005/06, foreign loan worth Birr 2404.13 million has been disbursed to the various sectors of the economy. The amount was higher by 31.2 percent compared to the second quarter of the previous fiscal year.
During the year under review, a total debt service worth Birr 370.6 million has been paid out to settle external debts. As compared to the previous fiscal year, the external debts payments have decreased by 32.3 percent.
In the first nine months of fiscal year 2005/06, 3936 investment projects with a total capital Birr 62.0 Billion were approved. These projects are expected to employ 140005 permanent and 204180 temporary, a total of 344185 employees.