The Executive Board of the International Monetary Fund (IMF) Tuesday approved a $3.4 billion loan to Ethiopia to address macroeconomic imbalances and lay foundations for private-sector led growth in the east African country.
The Executive Board’s decision will enable an immediate disbursement of SDR 766.75 million (equivalent to about US$1 billion), which will help Ethiopia meet its balance of payments needs and provide support to the budget.
Ethiopia’s economic program, supported by the four-year ECF arrangement, envisages a comprehensive policy package to stimulate private sector activity and increase economic openness to promote higher and more inclusive growth.
Strengthening social safety nets to mitigate the impact of reforms on vulnerable households is a critical component of the government’s reform program.
Ethiopia’s key policies include moving to a market-determined exchange rate to help address external imbalances and relieve FX shortages, combating inflation through modernizing the monetary policy framework, eliminating monetary financing of the budget, and reducing financial repression, creating space for priority public spending through mobilizing domestic revenues and restoring debt sustainability.
IMF Managing Director Kristalina Georgieva said “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.”
“The program is expected to help catalyze additional external financing from development partners and provide a framework for the successful completion of the ongoing debt restructuring. “This is a landmark moment for Ethiopia,” said Georgieva.
MG/as/APA