IMF approves $2.9 bln financing package for Ethiopia

The International Monetary Fund’s Executive Board on Friday approved a three-year $2.9 billion financing package to support Ethiopia’s economic reform program, the IMF said.

The agreement, supported by the Fund’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,” the IMF said in a statement.

The Ethiopian economic reform program would focus on addressing the foreign exchange shortage and transitioning to a more flexible exchange rate regime while working to strengthen oversight and management of state-owned enterprises.

It would also work to free up domestic revenue for poverty-reducing and essential infrastructure spending; financial sector reforms to support private investment and modernize the monetary policy framework; and strengthening of the supervisory framework and financial safety nets, the IMF said.

Ethiopian Prime Minister Abiy Ahmed pledged to undertake economic reforms when he took office last year, with a focus on leveraging private sector investment to help provide jobs for unemployed youth among the nation’s 100 million people.

Foreign exchange shortages have worsened in the past five years as the government spent heavily on infrastructure before export earnings from new sectors such as manufacturing took off.