House approves $1.5 Billion financial agreement with IDA

Addis Ababa, July 31, 2024 (FBC) – The House of Peoples’ Representatives of the Federal Democratic Republic of Ethiopia has approved the proclamation on financial agreement with the International Development Association (IDA).

Government whip at the parliament, Tesfaye Beljige (PhD), stated that the financial agreement aims to underpin reforms aimed at stabilizing the macroeconomy, with a particular focus on job creation, inflation regulation, addressing foreign exchange shortages, and facilitating structural adjustments.

Parliamentarians raised concerns regarding the recently announced reforms to the foreign exchange regime, the implementation of the financial agreement with the International Development Association (IDA), and the control mechanisms needed to effectively address economic challenges.

In response to these queries, Finance Minister Ahmed Shide highlighted Ethiopia’s progress over the past six years with the implementation of the first phase of its homegrown economic reform. This initiative has aimed to tackle long-standing economic issues, including debt burdens, inflation, and the need for structural changes in the economy.

Minister Ahmed noted that despite facing numerous challenges, such as the COVID-19 pandemic, ongoing conflict in the northern regions, and drought, Ethiopia has made significant strides in economic growth through these reforms.

He emphasized that the recently approved second phase of the homegrown economic reform program (HGER2) is part of the government’s ongoing commitment to completing essential macroeconomic reforms. The HGER2 program aims to combat inflation, alleviate debt burdens, and unlock further economic potential.

Additionally, Ahmed pointed out that funding initiatives recently announced by the IMF and World Bank are crucial for advancing the homegrown economic reforms, addressing inherited challenges, fostering economic growth, and enhancing the livelihoods of citizens.

He also mentioned that the financial agreement with IDA serves as an important catalyst in tackling major economic challenges and promoting growth.

In conclusion, the parliament approved the financial agreement with the IDA, with a majority of votes supporting it and only one vote against it, along with one abstention.