By Staff Reporter
ADDIS ABABA – (BORKENA) – The direct loan the Federal Government received from the National Bank of Ethiopia (NBE) exceeded 180 billion birr, sources revealed.
It is to be recalled that the government, which was in a severe budget deficit due to the economic instability and rise of expenses, used a large sum of advance or direct loan from the National Bank of Ethiopia (NBE) and applied several income generating mechanisms, according to the Amharic Weekly Reporter.
NBE has been providing advances to the government directly (by printing money). The total amount of money the bank has given in the 2022/23 Ethiopian Fiscal Year (EFY) is over 180 billion birr, the Reporter said based on available information.
Confirmation for this has come from the news sources of the Reporter, NBE, which provides the loan, and the Ministry of Finance (MoF), which receives the money for the execution of government activities. Furthermore, according to information obtained from the NBE, the amount of loan may increase by ten billion birr.
Available information from MoF indicates that a little after the advent of the Ethiopian Fiscal Year, until the end of the first quarter, the government received 60 billion birr as direct loan, Reporter indicated.
Along with this 60 billion birr, 236.5 billion birr, which was saved in the last few years, was converted into long-term bonds in October 2023, according to the second quarter credit statement report of MoF.
Last week, the Ministry of Finance and the Ministry of Planning and Development reviewed the performance of the 2022/23 EFY. In addition to the loans converted to long-term bonds in October, the government has borrowed 120 billion birr directly from the National Bank starting from the second quarter, the performance report of the fiscal year indicates.
This, along with the 60 billion birr, which the government has taken in the first quarter and converted into long-term bonds, brings the direct loan debt of the fiscal year to 180 billion birr. Reports of the three credit and the third quarter credit statements released by MoF two months ago reveal that 140 billion birr was taken as direct loans by the end of the third quarter, Reporter indicated.
According to a news source at MoF, the government has received about an additional amount of birr 40 billion in the fourth quarter. This will be confirmed when the fourth quarter credit report will be released in the near future, Reporter said.
According to news sources from the National Bank, following the conversion to long-term bonds, close to birr 130 billion stock of direct loan was reportedly recorded till the end of June.
Believing that the amount of direct loans that the National Bank released to the government is increasing and contributing to the cost of living, decisions on direct loans have been made on 11 August 2023.
It is to be recalled that when the governor of the National Bank, Mamo Mihiretu, made a statement, he decided that the amount of direct loans given to the government every year cannot go beyond 25 percent starting from the current fiscal year.
In the full fiscal year of 2021/22, the direct loan that the National Bank gave to the government was 76 billion birr. This has made the advance to grow to 180 billion birr in 2022/23 EFY. This means an increase of 140 percent, according to Reporter. However, the board of the bank has reached a decision not to release advance loans to the government more than 25 percent from this fiscal year.
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Using today’s common exchange rates this amounts to about $3.3 billion in US dollars. I wish numbers like this will also be reported in US dollars. 180 billion can sound and look unnecessarily alarming. Let’s convert that into Chilean Pesos. The earth under the gullible feet may seem trembling with when seeing 2,762,919,500,000.00. That is more than 2.7 trillion in Chilean Pesos. How about in Vietnamese currency? It is a doomsday ‘disaster’ with all emergency sirens blaring 77,723,467,000,000 Vietnamese Dongs!!! 77.7 trillion in Dongs!!! Don’t even think about telling that in Iranian Rials or Venezuelan Bolívars because you may cause many to drop dead from shock.