The International Monetary Fund (IMF) has approved the release of $340.7 million to Ethiopia following a successful review of its Extended Credit Facility (ECF). This latest disbursement is part of the broader $3.4 billion financial package approved in July 2024, bringing Ethiopia’s total disbursements to over $1.36 billion.
In its statement, the IMF highlighted Ethiopia’s robust commitment to implementing its economic reform program, which is aimed at addressing critical challenges, including restructuring its external debt of $28.9 billion. Key reforms introduced by Ethiopia include liberalizing the foreign exchange market and adopting a targeted monetary policy rate. These efforts have helped narrow the gap between official and parallel exchange rates, while improving the availability of foreign currency.
While acknowledging progress, the IMF noted that unmet demand for foreign exchange remains as the economy adjusts to these reforms. Nevertheless, the improvements in foreign exchange supply are easing previous shortages.
The IMF’s approval has also paved the way for additional support from other international institutions. The World Bank has committed $16.6 billion in new funding over the next three years to support Ethiopia’s development initiatives.
Ethiopia’s reform efforts, including opening up key state-owned enterprises to private investment and adopting a market-based foreign exchange system, have created new opportunities for foreign direct investment. The government hopes to attract more international investment in key sectors, including manufacturing, agriculture, renewable energy, and infrastructure, to boost sustainable growth and economic development.