Title: IMF Approves $3.4 Billion Aid Package for Ethiopia's Economic Reform Agenda

The Executive Board of the International Monetary Fund (IMF) has approved a four-year arrangement under the Extended Credit Facility (ECF) for Ethiopia, providing an amount equivalent to SDR 2.556 billion (about US$3.4 billion). This significant financial support, representing 850 percent of Ethiopia's quota, aims to bolster the country's Homegrown Economic Reform (HGER) Agenda.

The immediate disbursement of SDR 766.75 million (equivalent to about US$1 billion) will assist Ethiopia in meeting its balance of payments needs and provide crucial support to the budget. The economic program supported by the ECF arrangement focuses on stimulating private sector activity, enhancing economic openness, and promoting higher and more inclusive growth in Ethiopia.

Key components of the authorities' reform program include moving towards a market-determined exchange rate, combating inflation through modernizing monetary policy, mobilizing domestic revenues for public spending, restoring debt sustainability, and strengthening the financial position of state-owned enterprises. These policies are set to address macroeconomic imbalances and lay the groundwork for sustained economic growth.

IMF Managing Director Kristalina Georgieva emphasized the importance of Ethiopia's commitment to transformative reforms, stating, "The approval of the ECF is a testament to Ethiopia's strong commitment to transformative reforms." The program is also expected to attract additional external financing from development partners and facilitate the ongoing debt restructuring process.

Following a period of economic pressures exacerbated by shocks and unsustainable debt levels, Ethiopia's comprehensive reform program seeks to stabilize the economy, promote inclusive growth, and address vulnerabilities. The authorities' efforts include measures to mitigate the socio-economic impacts of reforms, enhance fiscal sustainability, improve public investment management, and strengthen financial sector governance.

The IMF's support of Ethiopia's homegrown structural reform agenda underscores a collective focus on governance, competitiveness, and private sector-led growth to uplift living standards and reduce poverty. As Ethiopia navigates this critical juncture in its economic evolution, the approval of the ECF arrangement signals a pivotal moment in the country's reform journey towards a vibrant, stable, and inclusive economy.