Köhler meets with Ethiopia's leaders on first leg of African visit

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IMF Managing Director Horst Köhler traveled to Ethiopia on July 5 to discuss the challenges facing the droughtstricken country and to emphasize the IMF's strong commitment to support the country's long-term vision for economic growth and poverty reduction. In subsequent stops on the week-long trip, Köhler visited Kenya, Madagascar, and Mozambique, where he attended the African Union Heads of State meeting in Maputo.

Ethiopia, one of the world's poorest countries, is currently struggling to deal with the devastating effects of a severe drought. Köhler's two-day visit provided him with an opportunity to witness firsthand the economic and social challenges that Ethiopians face and to discuss the economic situation with a wide range of people in government and in civil society.

Ethiopia making progress on poverty reduction

In his meetings with Prime Minister Meles Zenawi, Finance Minister Sufian Ahmed, and the country's economic team, Köhler welcomed the government's decisive actions to deal with the immediate effects of drought and its decision to adopt structural and lasting measures-Page 202such as agricultural modernization and investment in key economic and social infrastructure-to ensure food security in the future.He also underscored the international community's critical role in helping Ethiopia contend with this difficult situation.

Fighting poverty

The government of Ethiopia is making considerable progress in tackling poverty, aided by an increasing share of government spending earmarked for the social sectors and poverty reduction. Efforts to reduce poverty are also being supported by the IMF through a three-year, $140 million loan under its concessional lending facility-the Poverty Reduction and Growth Facility (PRGF).

Over the past three years, poverty-reducing spending has more than doubled as a percentage of GDP, rising from 8 percent in 1999/2000 to close to 18 percent in 2002/03. In his discussions with Prime Minister Meles and his economic team, Köhler proposed measures that could, with the assistance of its development partners, help Ethiopia make progress toward the UN Millennium Development Goals and in particular substantially reduce the prevailing level of poverty. They agreed on the need to...