Ethiopia and the World Bank have signed a $700 million loan agreement to support the East African country’s Financial Sector Strengthening Project, APA can report on Thursday.
The agreement was signed between Ethiopian Minister of Finance Ahmed Shide and World Bank’s Country Director for Ethiopia, Eritrea, Sudan, and South Sudan Maryam Salim, the finance ministry said in a statement.
The Financial Sector Strengthening Project is strategically designed to support the country’s critical financial sector reforms and recapitalisation efforts of the Commercial Bank of Ethiopia and the Development Bank of Ethiopia, the ministry said.
The fund aims to support the government’s recent bold reform to modernise and liberalise banking operations in the country, the statement said.
The agreement follows the recent decision to issue 900 billion Ethiopian Birr (about 7.03 billion U.S. dollars) worth of government debt securities to settle CBE’s non-performing loans and facilitate its recapitalisation.
Accordingly, a substantial portion of the funding will be allocated to recapitalising the Commercial Bank of Ethiopia (CBE) and Development Bank of Ethiopia (DBE), addressing debt legacy issues, improving asset quality, and ensuring compliance with capital adequacy requirements.
Moreover, it supports enhancing financial stability by strengthening the supervisory and regulatory framework of the banking sector.
It supports the government’s effort to create opportunities for access to capital to enhance job creation and sustain economic growth.
MG/as/APA