The executive board of the International Monetary Fund has approved an SDR 2.556 billion (about US$3.4 billion) ECF arrangement for Ethiopia. This decision will enable an immediate disbursement equivalent to SDR 766.75 million (about US$1 billion).
According to the organisation, the four-year financing package will support the authorities’ Homegrown Economic Reform (HGER) Agenda to address macroeconomic imbalances. Moreso, the loan would help to restore external debt sustainability and lay the foundations for higher, inclusive, and private sector-led growth.
“The ECF arrangement is expected to catalyse additional external financing from development partners and creditors,” IMF stated on its official website.
Speaking on the recent development, Kristalina Georgieva, IMF managing director further noted that 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.
Georgieva said, “This is a landmark moment for Ethiopia. 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.”
Furthermore, Antoinette Sayeh, deputy managing director, and acting chair, in a statement listed some of the plights the country is currently undergoing which influenced the board’s decision of the ECF to the country.
She said in part, “Ethiopia has been facing significant economic pressures amid a series of large shocks, high inflation, low international reserves, and unsustainable debt. In response, the authorities have launched a comprehensive reform program, to be supported by the ECF arrangement. It is focused on addressing macroeconomic imbalances, restoring external debt sustainability, and implementing wide-ranging reforms to promote a robust, inclusive, and sustainable economy.
“The recent measures to decisively tackle macroeconomic imbalances, including moving to a market-determined exchange rate, removing current account restrictions, and modernising the monetary policy framework to control inflation, are critical steps forward. Supportive macroeconomic policies, including the elimination of monetary financing of government deficits, monetary policy tightening, and prudent fiscal management, will need to be sustained to keep inflation in check, ensure a successful implementation of the market-determined exchange rate, and durably address exchange rate shortages.”
The deputy managing director of the IMF seized the opportunity to sympathise with the country over a recent landslide that occurred in the southern part of the nation which claimed some lives.
“The IMF extends its deepest sympathies to the Ethiopian people regarding the recent landslide that occurred in the Gofa Zone in the south of the country that led to the tragic loss of life, and wishes the authorities the best in their response and recovery efforts,” she said.
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