Ethiopia has secured $3.4 billion from the International Monetary Fund to support the country’s economic reforms programme.
Under the four-year Extended Credit Facility approved by the executive board on Monday, Ethiopia will receive an immediate disbursement to the tune of $1 billion to meet its balance of payments needs and provide support to the budget, IMF said.
“This is a landmark moment for Ethiopia. The approval of the ECF is a testament to Ethiopia’s strong commitment to transformative reforms. The IMF looks forward to supporting these efforts to help make the economy more vibrant, stable, and inclusive for all Ethiopians,” said Kristalina Georgieva, IMF Managing Director.
Through the Homegrown Economic Reform (HGER) Agenda, Ethiopian government targets to ease control on exchange rate and move towards a market-determined rates to address the forex shortage that has seen birr lose 30pc of its value against the dollar.
The country’s central bank has since removed restriction on the FX trading.
“The recent measures to decisively tackle macroeconomic imbalances, including moving to a market-determined exchange rate, removing current account restrictions, and modernizing the monetary policy framework to control inflation, are critical steps forward,” added Antoinette Sayeh, IMF Deputy Managing Director.
Ethiopia is further targeting to tackle its high inflation by modernizing the monetary policy framework, eliminating monetary financing of the budget, and reducing financial repression, creating space for priority public spending and addressing debt vulnerabilities through mobilizing domestic revenues and restore debt sustainability, including through securing timely debt restructuring agreements with external creditors.
IMF says the ECF will also help catalyze additional external financing from development partners and provide a framework for the successful completion of the ongoing debt restructuring as the country’s moves towards private-sector led growth.
