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

IMF News, November 27, 2024

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

IMF staff and the Ethiopian authorities have reached staff-level agreement 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.
Press Release No. 24/444
Date: November 27, 2024

Arrangement 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).
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.

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.
Spreads between the official and parallel markets have again fallen below 10 percent after briefly rising in October.
Recent progress supported by:
- easing of foreign exchange (FX) surrender requirements,
- increased activity in the nascent interbank FX market,
- successful launch of a domestic interbank money market.
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 recently approved by the Council of Ministers will help ease tight liquidity conditions while maintaining fiscal targets in line with program objectives.

Maintain overall tight monetary and financial conditions during the transition to interest rate-based monetary policy to ensure progress towards low and stable inflation in the medium-term.
Continue implementation of homegrown reforms, including the transition to a market-determined exchange rate and further development of FX and money markets.

IMF staff team led by Mr. Alvaro Piris visited Addis Ababa from November 12 to 26, 2024, to discuss progress and policy priorities in the context of the second review.
At mission conclusion, Mr. Piris issued a statement summarizing the staff-level agreement and next steps, noting the need for Executive Board approval in the coming weeks.
The staff team 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, and held discussions with banks and businesses across sectors.

International Monetary Fund. Press Release No. 24/444, November 27, 2024.

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