The International Monetary Fund (IMF) has approved a $261 million additional fund to Ethiopia following completion of its fourth review on Extended Credit Facility (ECF) for the east African country.
In a statement issued over the weekend, the IMF said the Ethiopian authorities continue to make progress in achieving the objectives of the Fund-supported programs with better-than-anticipated macroeconomic outcomes.
According to the IMF, the country has managed to achieve better growth, export performance, revenue mobilization, and reserves accumulation, and declining inflation in line with its home-grown economic reform agenda.
“The Board’s decision allows for an immediate disbursement of about US$261 million (SDR 191.7 million), helping Ethiopia meet its balance of payments and fiscal financing needs,” said IMF in a statement, noting that the completion of the review brings total disbursements under the arrangement to about $2.183 billion to the country.
Ethiopia’s ECF arrangement for a total of SDR 2.556 billion (850 percent of quota) or about $3.4 billion at the time of program approval on July 29, 2024 is aimed at supporting the authorities’ Homegrown Economic Reform Agenda (HGER) to address macroeconomic imbalances and lay the foundations for private sector-led growth.
“Overall program performance was broadly in line with program commitments” said the IMF, recalling that all quantitative performance criteria (QPCs) and most indicative targets (ITs) and most of the structural benchmarks were met.
It said the Ethiopian authorities have committed to a set of measures to ensure the fiscal deficit is financeable, and expenditures remain consistent with program objectives.
“Maintaining a tight monetary stance continues to be appropriate to anchor inflation expectations and support further declines in inflation. The authorities continue to take steps to enhance the functioning of the foreign exchange market,” it said.
According to the IMF, The progress made on debt restructuring negotiations under the Common Framework, including the recent completion of the signing of the Official Creditor Committee Memorandum of Understanding is welcome.
“The authorities continue to make progress in advancing their ECF-supported economic reform agenda enhancing the foreign exchange (FX) market, modernizing monetary policy, mobilizing fiscal revenues, and advancing the financial regulatory agenda,” the statement quoted Nigel Clarke, Deputy Managing Director and Chairman of the Board, as saying.
MG/as/APA