The Federal Democratic Republic of Ethiopia: Requests for Purchasing under the Rapid Financing Instrument, Debt Relief under the Catastrophe Containment and Relief Trust, Rephasing of Access Under the Three-Year Arrangements under the Extended Credit Facility and the Extended Fund Facility, and Reduction of Access under the Extended Fund Facility Arrangement

IMF Staff Country Reports, May 6, 2020

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The Federal Democratic Republic of Ethiopia: Requests for Purchasing under the Rapid Financing Instrument, Debt Relief under the Catastrophe Containment and Relief Trust, Rephasing of Access Under the Three-Year Arrangements under the Extended Credit Facility and the Extended Fund Facility, and Reduction of Access under the Extended Fund Facility Arrangement

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Bibliographic details

• Published: May 6, 2020
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781513542935.002

Overview and context

• Focus: Ethiopia’s requests for (i) purchasing under the Rapid Financing Instrument (RFI); (ii) debt relief under the Catastrophe Containment and Relief Trust (CCRT); (iii) rephasing of access under the three-year arrangements under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF); and (iv) reduction of access under the EFF arrangement.
• Immediate challenge: pronounced economic slowdown and an urgent balance of payments need owing to the coronavirus disease 2019 (COVID-19) pandemic.
• Public-health measures implemented by the authorities:
  • mandatory 14-day quarantine for travelers entering the country;
  • improving testing and containment capacity;
  • strengthening epidemic response coordination;
  • adopting a state of emergency to limit movement and gatherings and facilitate social distancing.
• Program context: Ethiopia showed good progress under the extended arrangements with the IMF, which aim to address external vulnerabilities and transition to a private sector-led growth model. The authorities remain committed to the reform program.

Key findings and staff views

• IMF staff supports the authorities’ plan to accommodate COVID-related fiscal measures and to resume the fiscal adjustment when the crisis subsides.
• To contain upward pressure on public debt, the authorities should consider further tightening the spending envelope for state-owned enterprises not directly engaged in the COVID-19 emergency response.
• The paper treats the COVID-19 shock as generating urgent balance of payments needs and requiring emergency financing and debt-relief measures.

Policy recommendations and measures

• Accept temporary accommodation of COVID-related fiscal measures with a clear plan to resume fiscal consolidation after the crisis subsides.
• Tighten spending envelopes for state-owned enterprises (SOEs) that are not directly engaged in the COVID-19 emergency response to limit public-debt pressures.
• Use RFI financing and CCRT debt-relief mechanisms alongside rephasing and access adjustments under ECF/EFF arrangements to address immediate financing gaps and preserve medium-term reform momentum.

Subject tags and keywords (as provided)

• Subject: Asset and liability management, COVID-19, Debt relief, Debt service, External debt, Health, Public debt
• Keywords: balance of payments pressure, COVID-19, CR, Debt relief, Debt service, economic reform program, emergency financing request, financing, financing gap, Global, IMF lending tracker, inflation dynamics, ISCR, pandemic, reform agenda

Content in this bundle

• Executive Summary — Ethiopia: RFI request and ECF‑EFF program adjustments
  • Executive Summary — Ethiopia: RFI request and ECF‑EFF program adjustments (Markdown version)
  • Executive Summary — Ethiopia: RFI request and ECF‑EFF program adjustments (PDF)