Macroeconomic reform consolidating Ethiopia’s partnership with int’l financial institutions: EU Ambassador

Addis Ababa, August 29, 2024 (FBC) – The under implementation of macroeconomic reform policy has been sending a signal that Ethiopia is determined for a market-oriented economy and consolidating partnership with global financial institutions, Ambassador Kobia said.

The outgoing EU Ambassador to Ethiopia, Roland Kobia hailed the macroeconomic reform policy as a pivotal step towards the country’s economic transformation, per ENA.

Ethiopia has faced major challenges such as deep-seated economic structural issues, including high inflation, foreign exchange distortions and macroeconomic imbalances, it was indicated.

In response, the East African nation has already embarked on a macroeconomic reform policy aimed at stimulating its decades of stagnant economy.

To support these efforts, Ethiopia secured substantial financial packages from the IMF and World Bank following its long-running negotiations with the two global financial institutions.

This support and credit facility arrangement would be a reflection of strong international backing, Ambassador Kobia noted.

“I hope that this partnership can bring other value in the sense that it will create space for dialogue and it will open the opportunity for Ethiopia and the partners to sit around the table regularly to talk about policy, the initiatives, and measures to be taken in Ethiopia in order to increase your (Ethiopia’s) comparative advantage.”

Kobia further stated that this landmark deal has become instrumental in advancing essential macro-economic and micro-economic reforms in Ethiopia.

“It will enable Ethiopia to get back on its feet economically, to overcome some difficult years and to be more competitive on the global markets…..

And if this agreement is well implemented, I strongly believe that Ethiopia will have a much better macroeconomic situation. But on the micro level, it is also important to improve the business environment.”

Kobia mentioned the deal with the IMF in particular, will open avenues for significant reforms, mainly to address foreign exchange related challenges, which are expected to stabilize the economy in the long run.

The ambassador also hoped the IMF a substantial investment package will be paramount for the nation’s efforts to successfully implement reform and attract additional financial supplies.

“Once an IMF package is secured, it attracts attention from all donors, including bilateral ones. They will view it as an opportunity to engage in dialogue and offer increased support, as the presence of the IMF package signals that reforms are underway and that Ethiopia is in a position to receive further assistance,” he revealed.

Speaking on European Union support for Ethiopia, Kobia detailed Union’s development assistance, which includes managing an envelope of 1 billion Euros.

The fund is allocated for key areas such as health sector restructuring, education, and support for small and medium-sized enterprises.

Kobia also reaffirmed the EU’s commitment to support Ethiopia’s endeavors in addressing Ethiopia’s pressing needs, adding that the union is keen to deeply invest in the country’s future.

The ambassador is also convinced that this alignment with Ethiopia is important given the country’s evolving relationships with other global partners, including BRICS countries and Gulf nations.

Reflecting on the expected difficulties during the execution of macroeconomic reforms, the ambassador sees the immediate challenges posed by these reforms, such as inflation and price hikes.

For him, enhanced public spending to mitigate their impact on vulnerable populations during the transition period is pivotal.

Ambassador Kobia also acknowledged that the rewards of the ongoing Ethiopia’s macroeconomic reform will take time to materialize.

He expressed confidence in the country’s development path, embarking on right reforms and focusing on peace and security.