Ethiopia has successfully completed its first review under the Extended Credit Facility (ECF) with the International Monetary Fund (IMF), unlocking a payment of $340.7 million. This payment is part of a larger financing package totaling $3.4 billion that was approved in July 2024. With this latest disbursement, Ethiopia's total funds received from the IMF now amount to $1.363 billion [39d6cbcf].
The IMF's approval comes as Ethiopia undertakes significant economic reforms, including restructuring its external debt of $28.9 billion under the Common Framework. This restructuring follows a default on a commercial loan in December 2023. Key reforms include liberalizing the foreign exchange market, implementing a targeted monetary policy rate of 15%, and increasing tax revenues. Notably, the official and parallel exchange rates of the Ethiopian birr have converged, a move aimed at stabilizing the economy [39d6cbcf].
Despite these efforts, Ethiopia faces challenges, with inflation projected to average around 30% for the current fiscal year. However, the IMF deal has catalyzed additional support, leading to $16.6 billion in funding pledges from the World Bank over the next three years, which is expected to bolster the country's financial stability and growth prospects [39d6cbcf].
This development aligns with the broader context of IMF support across various nations, including Liberia, where a recent $209 million ECF arrangement was approved to aid in economic recovery and reform [5d79ee3d]. The ongoing collaboration between Ethiopia and the IMF highlights the importance of international financial support in addressing economic challenges and fostering sustainable development in the region [5d79ee3d].