Addis Ababa, Ethiopia – It was announced today that the International Monetary Fund (IMF) and the Ethiopian government have reached a preliminary agreement regarding an extended credit facility. In a statement released by the IMF, the organization confirmed that it has agreed to provide Ethiopia with $3.4 billion over four years as part of this arrangement.
Under the terms of the agreement, Ethiopia will receive an initial disbursement of approximately $345 million once the IMF’s Executive Board officially approves the deal. This financial support is aimed at helping Ethiopia implement its indigenous economic reform program, which includes a shift toward a market-based foreign exchange rate.
“Ethiopia’s economic reform, particularly the adoption of a market-based foreign exchange transaction rate, is showing promising results,” the IMF stated. The implementation of this system has notably reduced the gap between the parallel and official foreign exchange markets.
Ethiopia initiated its market-based foreign exchange system in July of last year as part of broader economic reforms aimed at stabilizing the economy and promoting sustainable growth.
The announcement follows a period of intensive negotiations between IMF representatives, led by Alvero Piris, and Ethiopian government officials, including Governor of the National Bank of Ethiopia, Mamo Mehretu, Finance Minister Ahmed Shede, and Minister of State for Finance, Eyob Tekalign. The IMF delegation stayed in Ethiopia from September 17 to 26, 2024, to discuss the country’s request for financial support.
“Ethiopia’s ongoing reforms will help restore macroeconomic stability, secure foreign exchange supply, and support sustainable economic growth,” said Alvero Piris, following the negotiations. He added that the policy changes would also help to stabilize inflation by reforming the financial system and generate both economic and social benefits.
Piris also emphasized that the government’s increased revenue and financial sector reforms will strengthen public institutions and ensure the sustainability of government spending. He thanked Ethiopian officials for their cooperation in successfully implementing the IMF’s economic program.
This announcement comes after the IMF’s previous visit to Ethiopia concluded without an agreement. However, the new understanding reflects both parties’ commitment to moving forward with Ethiopia’s economic recovery plan.
The $3.4 billion loan, once approved, will provide crucial support for Ethiopia as it continues to navigate a challenging economic environment and push forward with critical reforms.
