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Eritrea’s economic growth improved in Q3 2014 – East Africa Quarterly Bulletin




By CapEri

The East Africa Quarterly Bulletin, which monitors socio-economic developments across the continent, has been released by country economists and country program officers of the African Development Bank Group’s (AfDB) East Africa Regional Resource Center (EARC), Nairobi, Kenya.

According to the report Economic growth in Eritrea improved during Q3 2014, supported by increased production in the mining sector and continued development of the Asmara mining project, which is expected to produce copper, zinc, gold and silver by mid-2015.

This growth has not resulted in broad based improvements in the living standards of ordinary Eritreans, it is expected to have a positive impact on the people’s welfare over the medium-term as the on-going investments in infrastructure, such as roads and power, are completed, the report stated.

The mining sector has continued to be the leading driver of economic growth especially since an estimated 60% of Eritrea’s territory contains minerals. Investing in Eritrea has increasingly become attractive given the country’s strategic location, relatively corruption free institutions, and sound macroeconomic policy, robust mining legislation and national cohesion and stability.

Eritrea’s domestic revenue receipts have been boosted significantly following a long-term agreement reached between the China-based Sichuan Road and Bridge Group and the Government to develop and explore mining areas with gold and copper.

Public revenue has been boosted by new and existing mining projects through increased tax collection and income from Government’s stake in the mining ventures. The Fiscal deficit is expected to reduce from an estimated 11.7% of GDP in 2013 to 10.3% of GDP in 2014 and 9.8% of GDP in 2015 on account of the growth in revenues from the mining projects.

The public debt stood at 105% of GDP in 2013 with domestic debt estimated at 84.9% of GDP while external debt was at 20.1%. The Government has continued to pursue its objective of fiscal consolidation, underpinned by its prudent debt management goal of reducing the debt to GDP ratio to the 40% threshold.

Eritrea’s short term economic growth and financial strength will depend mainly on the development of the mining sector.  However, achieving inclusive growth will require the implementation of prudent fiscal policies that allow the channeling of natural resources rents and revenues, the AfDB said.

The monetary policy stance was geared towards gradual recovery of economic growth while reducing controls on the foreign exchange market operations to encourage investments and growth of public revenues. Headline inflation remained at 6.4% during the third quarter of 2014 largely due to the continued effects of drought on food prices, which has exerted significant pressure on household disposable income and discretion to spend.

The official exchange rate remained at 15.4 Nakfa per USD despite the liberalization of foreign currency market operations. Full liberalization of the foreign currency regime, building broad partnership and multiple pathways to tap different financial sources could unlock the foreign currency shortages and exchange overvaluation. This would further promote private investment spending needed to boost economic growth and create sustainable employment in the country.

Exports increased during the quarter under review on the back of growing demand for cement in Qatar and pick-up in copper production at the Bisha mine, gold production at the Koka mine, and further development of the Asmara mining project.Export growth will be further boosted by the continuing development of the Asmara project, which is expected to produce multiple mineral exports including copper, zinc, gold and silver by mid-2015.

The Asmara project operator, Canada-based Sunridge Gold, increased the project’s after-tax net present value by 24% in March 2014, to USD 428m.Growth in exports is likely to be offset by a strong expansion in imports, as investments in mining boosts demand for capital goods. Imports of mining related services are also expected to rise, resulting in a reduction in the surplus on the services account.

Economic ties between Eritrea and Sudan have been strengthened by the President of Eritrea’s visit to Sudan in May 2014. The economic ties particularly related to the strengthening of bilateral trade are expected to improve Eritrea’s economic growth outlook.
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Eritrea’s economic growth improved in Q3 2014 – East Africa Quarterly Bulletin Reviewed by Admin on 12:01 PM Rating: 5

15 comments:

  1. this is news to me by the WEST MEDIA NEWS MAMA ETHIOPIA econommiy was higher than ERITREA so how can this happen acaountry with all this SUNCTION has agrowing ecoonomi can some one explaine this to me be for his death the dead meat PM MELES was telling us MAMA ETHIOPIA economy was up by 11%

    ReplyDelete
  2. Never forget, Eritrea is a 23 years old country that started from below Zero. Here a young country teaching the Africans how to build a nation brick by brick.

    Yes we know the growth of Eritrea is much much higher than what they are claiming. To even get such a number from such element must have been a hard fact to swallow for these elements.

    In any case, pictures do not lie and if any one is in doubt; please log on the the links below to some of what the Eritreans are doing to build their home.

    http://www.tesfanews.net/categ...
    and
    http://www.madote.com/search/l...1
    and

    http://www.madote.com/2012/12/...

    Stay on course Deki Ere, the Promised Land is just around the corner!

    ReplyDelete
  3. አታ ጬክዋኒ ስርዓት እግርኻ አልግሶ ካብ ርእሲ ኤርትራውያን

    ReplyDelete
  4. The source of your information is not cap but capperi.
    Please be fair to website which feeds you with information and inspire you to improve your disign

    ReplyDelete
  5. ERITREA
    MACROECONOMIC DEVELOPMENTS

    Economic Performance2
    #Fiscal Policy and Public Debt

    #Monetary Policy and Financial Sector
    #Economic developments

    http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/East_Africa_Quarterly_Bulletin_-_Third_Quarter_2014.pdf

    ReplyDelete
  6. "Never forget, Eritrea is a 23 years old country that started from below Zero...."
    I don't think so Everything was built before 23 years after independence nothing do in the regime. You have to accept this If you want to say one or two project just tell me. Before 23 years there were two universities in Ethiopia which are Addis Ababa and Asmara University but after 23 years there are above 32 public universities and 5 private universities in Ethiopia whereas in Eritrea maybe one university which is Asmara University(actually now adays it is below university status) I mentioned the above example for your comparison. So dear don't be fool Every development which show at this time in Eritrea was built before 23 years ago.

    ReplyDelete
  7. Arram Habesha. Mejemeria arehen sebseb.

    ReplyDelete
  8. Where did they get the data since Eritrea has not budget, constitution, parliament, functioning institutions, Even the ministers are just nominal minsters

    ReplyDelete
  9. ከመሳደብ ይልቅ ለምን መከራከሪያህን አታቀርብም…. ለማንኛውም አሁንም እደግመዋለሁ ባለፉት 23 ዓመታት ኤርትራ ውስጥ ምንም አዲስ ነገር አልተሰራም በዚህ እርግጠኛ ሁን፡፡ እ
    ቻው አብራሃ

    ReplyDelete
  10. Why should you bother and try to compare between the two countries?

    ReplyDelete
  11. Thank you for sharing the source!

    ReplyDelete
  12. This news is totally a lie. I worked in Eritrea with the Local Government and later with one of few international organizations in Eritrea. There is no any data in any ministry that can show any GDP growth, Government public deficit or such similar things. The Government has a phobia of sharing any information with anyone. The last 24 years No one know the country's budget including the year 2015. In Eritrea there is No any functional Gov't structure and institutional approach. For example No one knows who is 2nd in Command. In Eritrea all Government institutions work on the directives they receive from their superiors. There are No formal policies in different sectors. Can any one share any policy on any sector? No policy at all and officials told us their policies that changes from time to time with the Mood of the BIG GUY.

    There is one economic indicator for everyone that shows whether the country is doing good or Not. That is the market. Today in Eritrea the shops are empty and the people can not even buy Bread from shop(rationed).

    So are you kidding us?

    ReplyDelete

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