IMF Approves $340.7M Loan to Ethiopia After First Program Review

AFRICAN BUSINESS AND ECONOMYOctober 22, 2024 at 3:41 PM UTC

TLDR

IMF completes first review of Ethiopia's Extended Credit Facility, disburses $340.7 million
Ethiopia praised for commitment to home-grown economic reform program and key structural reforms
Economic changes include restructuring external debt, liberalizing foreign exchange market, and introducing 15% policy rate

The International Monetary Fund (IMF) has completed its first review of Ethiopia's Extended Credit Facility (ECF), resulting in a disbursement of around $340.7 million. This is part of a broader $3.4 billion, four-year financing package approved in July, with total disbursements to date reaching about $1.363 billion.

The IMF praised Ethiopia's commitment to its home-grown economic reform program, which has advanced key structural reforms. As part of the program, Ethiopia is restructuring $28.9 billion in external debt under the Common Framework and has implemented significant economic changes, including liberalizing its foreign exchange market for the first time in five decades and introducing a 15% policy rate.

The convergence of the official and parallel exchange rates and the boost in foreign exchange supply have helped reduce the acute shortages. Despite inflation expected to average around 30% this year, the reforms are anticipated to attract more foreign direct investment and credit, driving economic growth.

Key Takeaways

Ethiopia’s successful completion of the IMF’s first review highlights the country’s progress in addressing external debt and currency market issues. The disbursement is part of a broader $3.4 billion package, with additional World Bank funding pledges of $16.6 billion over the next three years, which will help Ethiopia stabilize its economy, improve foreign exchange access, and drive investment as the nation continues to implement critical reforms.

Ethiopia

IMF

Economy

Horn of Africa

Extended Credit Facility

IMF Loans