Reform expected to get rid enterprises’ debt stress

BY ABEBE WOLDEGIORGIS

ADDIS ABABA – The absence of good governance, sluggish pace of discharging responsibilities and inefficient structures of public enterprises in the pre-2018 period have caused 19 billion USD loss, economic expert said, expressing optimism that the current reform would reverse the situation.

Speaking to The Ethiopian Herald, an economist and private consultant Solomon Zegeye stated that the loss is unbearable to the developing nation like Ethiopia and public enterprises’ inefficiency, which is inherited from TPLF-dominated regime, puts the country’s economy in a serious challenge.

Public enterprises had to be models for other firms in efficient management; however, the appointment of weak and incompetent persons, based on their party loyalty, lead the institutions to failure and bankruptcy, he added.

“It is understood that in the past, the Auditor General recurrently reported its audit findings and the financial deficit to the parliament, but the response to the report was turning a blind eye and a deaf ear.”

As to Solomon, during the TPLF-dominated regime, the debt of public enterprises was written off and it was shifted to the government thereby becoming public debt and worsening the country’s debt distress. Broadly speaking, the public enterprises were established to serve the political interest of the elite group and corruption and nepotism were highly prevalent.

 Consequently, the government is expected to employ meticulous approaches to address the longstanding mismanagement of public enterprises whilst the effort may take a lengthy period.

Instead of writing off the debt of public enterprises, the government should transfer inefficient institutions and those will not have strategic or security importance to private sector based on studies, the expert noted.

It is remembered that recently the Ministry of Finance announced that public enterprises such as Ethiopian Electric Power, Ethiopian Electric Utility, Ethiopian Railway Corporation, Ethio-Engineering Group (formerly METEC), Chemical Industry Corporation, Construction Works Corporation and the Sugar Corporation have encountered a high risk of debt distress.

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