IMF reaches $3.4 billion financing deal with Ethiopia

Tuesday, July 30, 2024

Panoramic view of Addis Ababa cityscape, Ethiopia, April 24, 2024. REUTERS/Tiksa Negeri/File Photo Buy licensing rights

Ethiopia has reached an agreement with the International Monetary Fund for a new financing program worth $3.4 billion, the IMF said on Monday.

Ethiopia’s central bank on Monday floated the country’s birr currency, a key step toward gaining support from the International Monetary Fund and making progress on a long-delayed debt restructuring.

The Horn of Africa nation, mired in high inflation and chronic foreign exchange shortages, late last year became the third economy on the continent to default on its debt in recent years.

The Congolese government has been negotiating with the IMF since last year to establish a new loan program after its previous fund-supported program in 2019 was abandoned due to the conflict in the northern Tigray region, which culminated in a peace agreement in November 2022.

Reuters previously reported that Ethiopia was seeking a deal with the IMF for about $3.5 billion.
The IMF said the deal would enable immediate disbursement of about $1 billion.

Africa’s second most populous country requested a debt restructuring in early 2021 under the G20 Common Framework process, but progress has been slow due to two years of civil war in Tigray.

The government in Addis Ababa unveiled some economic reforms that analysts said were linked to negotiations for a new IMF program, including an interest rate-based monetary policy adopted earlier this month.

Reporting by Jasper Ward and Eric Beech; writing by Duncan Miriri;