IMF approves new $261 million disbursement for Ethiopia

The International Monetary Fund (IMF) has approved a disbursement of 261 million USD for Ethiopia following the completion of the fourth review of the country's 48-month Extended Credit Facility (ECF).

This disbursement will assist Ethiopia in addressing its balance of payments and budgetary needs, increasing total IMF disbursements under the program to over 2.18 billion USD.

The IMF reports that Ethiopia's economy is performing above expectations, with strong growth metrics including higher exports, improved revenue collection, and increased foreign reserves, while inflation is showing signs of easing.

The ECF program, valued at approximately 3.4 billion USD, supports Ethiopia’s Homegrown Economic Reform Agenda. This agenda aims to rectify macroeconomic imbalances and establish a foundation for growth led by the private sector.

Ethiopia has achieved all major quantitative targets and most structural reforms. However, the current federal budget has deviated from initial program assumptions, prompting the authorities to commit to new measures for managing the deficit and aligning spending with program objectives.

Policy Recommendations and Debt Management

The IMF advises Ethiopia to maintain a tight monetary policy to control inflation, proceed with foreign exchange market reforms, and implement tax and customs reforms to expand the tax base.

Regarding debt, the IMF acknowledges progress under the G20 Common Framework, including the signing of a memorandum of understanding with official creditors, while discussions with private lenders continue.

IMF Deputy Managing Director Nigel Clarke stated that reforms in foreign exchange, monetary policy, revenue mobilization, and financial regulation are yielding positive results. Nonetheless, sustaining reform momentum is crucial for Ethiopia's medium-term growth and poverty-reduction objectives.

Based on reporting by Africanews.