The Red Sea State of Eritrea will introduce major fiscal and monetary reforms as of the beginning of 2013 in order to meet macroeconomic challenges by creating a more conducive environment for the development of private investment in the country.
Finance Minister, Mr. Berhane Habtemariam, informed the more than 700 citizen investors that gathered at the second National Investment Conference in the capital that the government would make major reforms at the existing monetary and fiscal policies with a view of ensuring economic growth through encouraging private investment prospects in the domains of agriculture, manufacturing and tourism.
Accordingly, previous proclamations and legal notices that crowds private investments in the country will get considerably watered-down under the new reform. Proclamations 125/2002 and 100/2005, for instance, regarding the ‘illegal trading and exchanges act’ as well as the ‘declared goods and import permits’ regulation under the legal notice No. 78/2003 will be completely knocked out.
As the Minister plainly put it, starting from the beginning of 2013, investors are allowed to import absolutely anything and with out the need to question the origin of their hard currency. This means that the investor can either use his own money or from the bank to made imports.
The financial sector reform also affects the scope of the banks to go beyond the elementary deposit and loan services it currently provides. It requires empowering of manpower with the necessary skills and technology.
These timely and urgent monetary policy reforms are expected to boost the confidence of domestic as well as foreign investors operating in the country.
In his brief remarks at the closing ceremony of the investment conference, President Afwerki pledged that implementation of all government-sponsored projects for 2013 would go into effect.
Taking into considerations the higher mineral revenues, projected improvements in the agricultural outputs and infrastructure development activities in the country, the Economist Intelligence unit (EIU) recently forecast an 8.5% economic growth in 2013 compared to 8.2% in 2012. The country’s budget deficit and inflation has also expected to show a remarkable decline to 13% and 12% respectively in 2013.
The conference is expected to lay the groundwork for drawing up further strategies that can add impetus to the growing economy from a re-configured private sector.