Press Release No. 24/444

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

November 27, 2024

• IMF staff and the Ethiopian authorities have reached staff-level agreement on economic policies to conclude the second review of the four-year USD$ 3.4 billion ECF arrangement. Formal completion of the review by the IMF Executive Board would give Ethiopia access to financing of about US$251 million.
• Implementation of Ethiopia’s homegrown economic reform program, including adoption of a market-determined exchange rate, continues to advance well. Foreign exchange shortages have eased substantially, and spreads between the official and parallel markets have again fallen below 10 percent.

Washington, DC: A staff team from the International Monetary Fund (IMF) led by Mr. Alvaro Piris, visited Addis Ababa from November 12 to 26, 2024, to discuss progress on reforms and the authorities’ policy priorities in the context of the second 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 mission, Mr. Piris issued the following statement:

“The IMF staff team and the Ethiopian authorities have reached staff-level agreement on the second 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 191.70 million (equivalent to about US$251 million). Future reviews will be on a six-monthly schedule.

“Ethiopia’s economic reform program, including the transition to a market-determined exchange rate, continues to advance well. Recent progress has been supported by easing of foreign exchange (FX) surrender requirements, increased activity in the nascent interbank FX market, and the successful launch of a domestic interbank money market. Foreign exchange shortages have eased substantially, and spreads between the official and parallel markets have again fallen below 10 percent after briefly rising in October.

“With macroeconomic stability supported by prudent policy and a so far muted FX reform impact on inflation, conditions for economic growth in the period ahead appear promising. Execution of the supplementary budget that was recently approved by the Council of Ministers will help ease tight liquidity conditions while maintaining fiscal targets in line with program objectives. To ensure progress towards low and stable inflation in the medium-term, it will be important to maintain overall tight monetary and financial conditions during the transition to interest rate-based monetary policy.

“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 businesses operating in a range of sectors.”