Ethiopia is poised to receive an additional US$251 million from the International Monetary Fund (IMF) as part of a four-year, $3.4 billion Extended Credit Facility (ECF) arrangement finalized four months ago.
In a statement released on 27 November, 2024, the IMF announced that its staff and Ethiopian authorities have reached a staff-level agreement on economic policies to conclude the second review of the ECF arrangement, which was approved by the IMF Executive Board on 29 July, 2024.
This development follows the visit of an IMF staff team, led by Alvaro Piris, to Addis Abeba from 12 to 26 November, 2024. The mission aimed to evaluate progress on economic reforms and discuss policy priorities in the context of the ongoing review of Ethiopia’s economic program.
According to the statement, the agreement remains subject to approval by IMF management and the Executive Board in the coming weeks. In its latest announcement, the IMF also noted progress in Ethiopia’s reforms.
Implementation of Ethiopia’s homegrown economic reform program, including the adoption of a market-determined exchange rate, continues to advance well, stated the IMF. Foreign exchange shortages have eased substantially, and spreads between the official and parallel markets have again fallen below 10%.
The recent staff-level agreement follows a similar milestone two months ago, when both parties announced the completion of the first review under Ethiopia’s four-year, $3.4 billion ECF program. On 18 October, 2024, the IMF Board approved the first review, enabling Ethiopia to receive $340.7 million. In its latest statement, however, the IMF confirmed that subsequent reviews will be conducted on a six-monthly basis.
The IMF’s loan package is part of a macroeconomic reform program implemented by Ethiopia in late July 2024. This reform marked a significant shift from a crawling peg exchange rate system to a market-based foreign currency regime.
Following the introduction of the reform, Central Bank Governor Mamo Mihretu disclosed in an online video that Ethiopia would receive $10.7 billion in external financing from the IMF, World Bank, and additional creditors as part of the reform package.
