Ethiopia May Lose $975 million EU Budget Support Over Tigray Conflict


European Union officials are considering suspending budget support to Ethiopia because of the month-long conflict in the Horn of Africa nation’s Tigray region.

The EU provided 815 million euros ($975 million) of budget support to Ethiopia in the seven years through 2020. Officials meeting later this month to consider an additional 90 million-euro transfer may delay the funding because of the impact the violence has had on human rights, said two EU officials with knowledge of the discussions who asked not to be identified as they aren’t authorized to speak publicly.

Any decision to reduce aid that finances about 13% of the nation’s budget would strain an economy already struggling to deal with the impact of the coronavirus pandemic and the conflict. Economic growth is forecast to slow to 1.9% this year from 9% in 2019, according to the International Monetary Fund.

“The EU will take further decisions on budget support for Ethiopia in light of developments on the ground and based on a specific request by the government,” Ana Pisonero-Hernandez, a spokeswoman for the European Commission, said in an emailed response to questions. “No decision has been made yet as to a potential 90 million-euro budget support measure before the end of the year.”

Billene Seyoum, the spokeswoman for Prime Minister Abiy Ahmed, didn’t immediately respond to a request for comment sent by mobile-phone text message.

Ethiopia budgeted for 36.8 billion birr ($960 million) million of grants in the 2019-20 fiscal year, according to Finance Ministry documents. That compares with a total revenue estimate of 289.8 billion birr.

“Ethiopia’s international partners are unlikely to withdraw their assistance completely, but they will probably take some concrete measures to demonstrate their concerns about the government’s hard-handed response to the situation in Tigray, including its impact on civilian populations,” said Stephen Brown, a professor in political science at the University of Ottawa.

Fighting that erupted in Tigray on Nov. 4 has resulted in heavy casualties and forced tens of thousands of people to flee their homes. EU Crisis Management Commissioner Janez Lenarčič will fly to Ethiopia on Tuesday to urge Peace Minister Muferiat Kamil to end a blockade on international aid organizations accessing Tigray.

“I wish to urge the Ethiopian authorities one more time to enable full and unrestricted access of humanitarian workers and humanitarian aid to all areas affected by fighting,” Lenarčič said on Monday. Ethiopia hosts the second-largest refugee population in Africa.

Lenarčič will on Wednesday travel to neighboring Sudan, where more than 45,000 of Tigray residents have sought refuge from the conflict.

By Simon Marks and Samuel Gebre

Source: Bloomberg


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