Press Release No. 24/348

IMF Reaches Staff-Level Agreement on the First Review of the Extended Credit Facility for Ethiopia

September 27, 2024

• IMF staff and the Ethiopian authorities have reached staff-level agreement on economic policies to conclude the first review of the four-year US$ 3.4 billion ECF arrangement. Formal completion of the review by the IMF Executive Board would give Ethiopia access to financing of about US$345 million.
• Implementation of Ethiopia’s homegrown economic reform program, including the adoption of a floating exchange rate regime in late July, is advancing well. The exchange rate in the official market has largely closed the gap to the parallel market, with little disruption to the broader economy.
• Successful implementation of reforms will help strengthen Ethiopia's macroeconomic stability, improve foreign exchange availability, and support sustainable economic growth.

Washington, DC: A staff team from the International Monetary Fund (IMF) led by Mr. Alvaro Piris, visited Addis Ababa from September 17 to 26, 2024, to discuss progress on reforms and the authorities’ policy priorities in the context of the first review of Ethiopia’s economic program supported by the IMF’s Extended Credit Facility (ECF). The arrangement was approved by the IMF Executive Board on July 29, 2024, for an initial total amount of SDR 2.556 billion (about US$3.4 billion at that time).

At the conclusion of the visit, Mr. Piris issued the following statement:

“The IMF staff team and the Ethiopian authorities have reached staff-level agreement on the first review of Ethiopia’s economic program under the ECF arrangement. The agreement is subject to approval of IMF management and the Executive Board in the coming weeks. Upon completion of the Executive Board review, Ethiopia would have access to SDR 255.60 million (equivalent to about US$345 million).

“Ethiopia’s economic reform program, including the transition to a market-determined exchange rate, is advancing well. Exchange rate movements following the adoption of a floating exchange rate regime on July 29, 2024, have largely closed the gap between formal and parallel markets, with little disruption to the broader economy. The new exchange rate regime is alleviating the acute shortage of foreign exchange that previously existed, lifting a significant impediment to economic activity.

“Looking ahead, steady advancement of the homegrown economic reform plan will help anchor macroeconomic stability and support economic growth. Continued tight monetary policy and the end of monetary financing of government will reduce inflation while a temporary fiscal spending package will help cushion the socio-economic impact of the reforms. Revenue mobilization and reforms to strengthen the financial position of state-owned enterprises will create space for sustainable priority spending by the government.

“The staff team is grateful to the authorities for good discussions and their strong action to ensuring success of the IMF-supported economic program. The mission met with Minister of Finance Ahmed Shide, Governor of the National Bank of Ethiopia Mamo Mihretu, State Minister of Finance Eyob Tekalign, and other senior officials. Staff also had productive discussions with banks and private companies.”