Press Release No. 05/292

Press Release: IMF to Extend 100 Percent Debt Relief to Ethiopia Under the Multilateral Debt Relief Initiative

December 23, 2005

"Under the Multilateral Debt Relief Initiative, the IMF Executive Board has approved debt relief for Ethiopia (see Press Release No 05/286). As part of the Initiative, the IMF will provide 100 percent debt relief on all debt incurred by Ethiopia to the IMF before January 1, 2005 that remains outstanding. This amounts to approximately US$161 million, or US$114 million excluding remaining assistance under the Heavily Indebted Poor Countries (HIPC) Initiative. This debt relief should become available in early January as soon as the remaining consents of the contributors to the PRGF Trust Subsidy Account have been received. The international community has made these additional resources available to help Ethiopia make progress toward its Millennium Development Goals (MDGs).

"Ethiopia has qualified for IMF debt relief because of its overall satisfactory recent macroeconomic performance, progress in poverty reduction, and sound public expenditure management. In particular, Ethiopia has recorded two years of high economic growth, and rapidly expanding exports, while containing inflationary pressures. Commitment to adjust policies in response to emerging macroeconomic pressures also provides assurance that macroeconomic stability will be maintained. In addition, efforts to strengthen cash management systems and improve internal control and audit are underway. Performance in these areas provides assurance that resources made available under the Multilateral Debt Relief Initiative will be used effectively.

"The IMF looks forward to working with Ethiopia to help it develop a strong and stable economy and to make sustained progress toward the MDGs," he said.