Ethiopia, AFD sign agreement for €28.5 million in budget support and technical assistance

Addis Ababa, March 25, 2025 (FMC) – The Ministry of Finance of the Federal Democratic Republic of Ethiopia (FDRE) and Agence Française de Développement (AFD) have signed a significant financial agreement to support Ethiopia’s ongoing economic reform agenda.

The agreement for this first tranche of the financial and technical support from France to HGER 2.0 comprises €25 million in budget support (signed by Minister Ahmed Shidé and AFD’s CEO Rémy Rioux on December 21, 2024) and €3.5 million grant for technical assistance signed today by Eyob Tekalign, State Minister of Finance, and Mr. Louis-Antoine Souchet, AFD Country Director.

Under the agreement, €10 million of the planned €25 million budget support was front-loaded and disbursed in December 2024.

The technical assistance component will be implemented by the Ministry of Finance and the National Bank of Ethiopia, focusing on the implementation of the Homegrown Economic Reform (HGER) 2.0, especially financial sector reforms, State-Owned Enterprises (SOEs) policy reforms, Public-Private Partnership (PPP) regulatory frameworks, and sectoral reforms involving multiple implementing agencies.

During the signing ceremony, the State Minister of Finance, Eyob Tekalign, emphasized the importance of this agreement, stating, “This partnership represents another milestone in the longstanding collaboration between Ethiopia and France, reinforcing their shared vision in advancing key economic reform initiatives. It also comes at a crucial time as Ethiopia continues its structural reform efforts”.

He underlined that “while the budget support will provide much-needed fiscal space, the technical assistance will bolster Ethiopia’s efforts in Public-Private Partnerships (PPP), State-Owned Enterprise (SOE) reforms, strengthen financial sector openness and competitiveness, enhance institutional capacities for effective policy implementation, broader economic reform activities, and other cross-cutting issues critical to sustainable development.”  H.E. Dr. Eyob also expressed appreciation for AFD’s continued support and commended the flexible design of the technical assistance program, which accommodates multiple partners while ensuring value for money.

Mr. Louis-Antoine Souchet, on the other hand, reaffirmed AFD’s commitment to Ethiopia’s reform agenda, stating, “AFD is pleased to continue its support to Ethiopia’s ambitious economic transformation.

This agreement reflects France’s continued commitment to support HGER agenda, through strengthening governance of SoEs, economic sustainability, and public sector efficiency. And we will continue to develop fruitful peer-to-peer exchanges and knowledge sharing between French and Ethiopian entities in these areas that are crucial for efficient reform implementation.”

He further noted that AFD’s budget support and technical assistance would continue in the coming years, with an expanded focus on tax policy, tax administration and civil service reforms, as well as critical sectors such as energy and logistics.

In his closing remarks, Eyob Tekalign encouraged AFD to explore opportunities for scaling up the budget support and technical assistance.

He reiterated the Ministry of Finance’s commitment to ensuring the effective implementation of the TA program and emphasized the importance of aligning activities with the Government of Ethiopia’s priorities while fostering coordination among development partners to maximize impact and avoid duplication of efforts, as per the Ethiopian Finance Ministry.