Djibouti - Future trends

The key factors for the Ethiopian economy are the amount of Ethiopian trade passing through the port and the size of the French garrison. Despite the interim settlement between Ethiopia and Eritrea, almost all of Ethiopia's trade still flows through Djibouti, and this situation is likely to continue for the foreseeable future. Domestic political pressure to maintain employment levels in the public sector is likely to limit the pace of economic reform through privatization, despite IMF pressure. Delegation visits by the IMF have not resolved concerns over the lack of financial transparency and the poor availability of data, and this will impair the prospects for financial assistance from the donor community. The economy is not expected to show much significant growth in the near future, with the expansion of the use of port facilities by Ethiopia being offset by the scaling-down of the presence of French troops.

In politics, Guelleh received praise for having convened the Somali peace conference. Full relations have been restored with Eritrea, and there is now the prospect of more stable relations in the area. If peace comes to Somalia, it will reduce tensions caused by the influx of Somali refugees as the refugees begin to return home.

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