Friday, June 2, 2023
BusinessMPs urge officials review debt relief schemes

MPs urge officials review debt relief schemes

The Budget and Finance Standing Committee of the House of Peoples’ Representatives urged officials to reconsider the mechanism being used to minimize the tens of billions of dollars of debt burden shouldered by public enterprises.  

Officials of the Ministry of Finance (MoF), along with several public enterprises, presented their first-quarter performance report of the year to the committee on Wednesday.

During the meeting, Members of Parliament questioned officials on how debt is canceled while projects are still underperforming and failing to recover.

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Lawmakers pointed out enterprises like the former Metal and Engineering Corporation (MeTEC), which is rebranded as Ethio Engineering Group, Yayu Fertilizer Factory, which was discontinued after costing millions of dollars, Sugar Corporation, Agricultural Works Corporation, Development Bank and the like could not perform well.

15 of the 23 plus enterprises administered by the Public Enterprises Holding and Administration Agency (PEHAA) presented their performance reports last week. The majority of them showed very low returns, even lower compared to a similar period the previous fiscal year.

Members of the Committee urged officials to devise methods to make the projects efficient and effective. 

Responding to MPs, PEHAA Director, Habtamu Hailemichael said an overwhelming structural and financial reform is needed to make them competent to produce the expected results.

State Minister of Finance, Eyob Tekalign (PhD), stated that the public debt owed by public enterprises is over 780 billion birr. 

Stressing the significance of reducing the debt burden of these enterprises, Eyob said that unless the nation handles the debt crisis it is in, the problem might end up crumbling the country’s economy into an unmanageable and full-fledged crisis.  

MPs warned last week that projects launched without the due feasibility studies needed have ended up taking up more money than originally set for them and that the situation needs to change.

Eyob stated that efforts by the Ethiopian government towards the reduction and cancellation of debts have been made with great concern and cautiousness through designed and accepted financial systems to help enterprises alleviate their debt. 

He noted that despite the ongoing debt reductions or cancellations, the government will continue to prosecute individuals who have squandered public resources.

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