The peace agreement with Ethiopia and lifting of international sanctions provide a welcome opportunity for Eritrea to build an impetus for economic development, the IMF said in a statement on Wednesday.
It said there is cause for optimism although Eritrea still faces a difficult economic situation following an extended period of international isolation.
The IMF said it stands ready to support economic reforms through policy advice, technical assistance and training to help achieve macroeconomic stability and inclusive growth.
This assessment comes as an IMF team, led by Bhaswar Mukhopadhyay, held talks in the capital Asmara from May 13–22, 2019 on the Article IV Consultation with Eritrea, the first such discussions in ten years.
At the end of the mission, Mr. Mukhopadhyay said “Eritrea’s economy is dominated by agriculture and mining and is highly vulnerable to shocks”.
According to him, data estimates show that GDP fell sharply in 2017, driven by the regional drought.
Real GDP growth is expected to have recovered in 2018, he added.
“Looking ahead, the near-term outlook for real GDP growth is challenging due to the tight fiscal situation and existing restrictions on economic activity. Over the medium-term prospects for a pick-up in growth are promising, including due to new mining projects coming on stream. Policies to restore the health of the fiscal and financial sectors will be central to ensuring macroeconomic stability and broader economic reforms will help to deliver inclusive development” he said.
PR/as/APA