IMF Approves Ethiopian Second Review of $3.4B programme

The International Monetary Fund (IMF) executive board has approved the second review of Ethiopia’s financing program, unlocking a disbursement of approximately $250 million.

This decision follows Ethiopia’s ambitious four-year, $3.4 billion reform program, agreed upon last July, which included significant measures such as floating its currency, the birr, to address its debt restructuring challenges.

In a statement, the IMF noted, “The authorities continue their efforts to restore debt sustainability and are taking steps to secure a debt treatment. The progress made on debt restructuring negotiations under the Common Framework is welcome. The financing assurances received and adjustment efforts made are consistent with IMF policy requirements and program parameters.”

The IMF staff and Ethiopian government reached an agreement on the review in late November.

According to the IMF, Ethiopia’s economy has performed better than anticipated under the reform program.

Inflationary pressures have been less severe than expected, and foreign currency reserves have grown at a faster pace than projected.

After conducting an accelerated series of reviews to monitor the impact of Ethiopia’s reforms, the IMF announced in November that it would transition to a standard six-month review schedule.

Despite the positive assessment, the IMF’s involvement in Ethiopia’s debt restructuring has faced criticism.

Some, including World Bank staff, have questioned the conclusions of the IMF’s debt sustainability assessment, citing concerns raised in an internal document last year.

Reuters/Patience Ameh