IMF approves $2.9b financing package for Ethiopia

Addis Ababa, December 21, 2019 (FBC) – The Executive Board of IMF yesterday approved a three-year $2.9 billion financing package to help Ethiopia implement its homegrown economic reform plan to maintain macroeconomic stability and improve living standards.

The financing package, supported by IMF’s Extended Credit Facility (ECF) and Extended Fund Facility (EFF), “aims to support the authorities’ implementation of their ambitious reform agenda and catalyze concessional donor financing,” said IMF in a statement.

The Executive Board’s decision will enable an immediate disbursement equivalent to $308.4 million.

Mr. David Lipton, First Deputy Managing Director and Acting Chair, said “a decade of rapid growth, underpinned by strong policies, has supported a reduction in poverty and improved living standards in Ethiopia. However, the public investment-driven growth model has reached its limits.

“The authorities have prepared a Homegrown Economic Reform Plan to address macroeconomic imbalances, reduce external and debt vulnerabilities, phase out financial repression, and lay the foundation for private sector-led growth.

“A financial arrangement with the Fund will support the authorities’ plan, helping to catalyze concessional financing from other development partners.

“The program aims to address foreign exchange shortages and external imbalances; reform state-owned enterprises (SOEs); safeguard financial stability; and strengthen domestic revenue mobilization.”

The Executive Board also concluded the 2019 Article IV consultation with Ethiopia.