Addis Ababa, July 29, 2024 (FBC) – The Executive Board of the International Monetary Fund (IMF) approved a four-year arrangement under the Extended Credit Facility (ECF)[1] for Ethiopia in an amount equivalent to SDR 2.556 billion (850 percent of quota or about US$3.4 billion) to support the government’s implementation of its Homegrown Economic Reform (HGER) Agenda aimed at addressing macroeconomic imbalances and laying the foundations for private-sector led growth.
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, restoring debt sustainability, including through securing timely debt restructuring agreements with external creditors; and strengthening the financial position of state-owned enterprises to tackle critical macro-financial vulnerabilities.
“This is a landmark moment for Ethiopia,” said IMF Managing Director Kristalina Georgieva. “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 IMF Managing Director Kristalina Georgieva.
“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, Kristalina Georgieva said.
