The Executive Board of the International Monetary Fund (IMF) has approved an immediate disbursement of about $248 million to Ethiopia to help the East African country meet its balance of payments needs.
The approval came after the IMF held its second review of the 48-month Extended Credit Facility (ECF) for Ethiopia, according to a statement issued by the IMF on Friday.
Ethiopia’s ECF arrangement for a total of about $3.4 billion was approved late in July last year and the completion of the second review brings total disbursements under the arrangement to about $1.611 billion.
The four-year financing package intends to support Ethiopia’s Homegrown Economic Reform aiming at addressing macroeconomic imbalances, restoring external debt sustainability, and laying the foundations for higher, inclusive, and private sector-led growth.
The statement noted that the country’s foreign exchange market functioning has improved amid significant policy actions taken by the government.
The statement pointed out that progress in raising domestic fiscal revenues, strengthening state-owned enterprises, and anchoring financial stability is promising while modernization of the country’s monetary policy framework is advancing.
The IMF’s statement stressed the need for Ethiopian authorities to continue their efforts to restore debt sustainability and expand social safety nets and mitigate the impact of the reform on vulnerable people.
“Continuing to restrict NBE’s foreign exchange interventions and additional policy measures to support FX market development will be critical to enhance market efficiency and deepening. Prudent macroeconomic policies, including continued tight monetary policy and avoiding monetary financing of government deficits are essential to reducing imbalances and ensuring macroeconomic stability,” the statement added.
MG/as/APA