Addis Abeba– The International Monetary Fund (IMF) announced the completion of its second review of Ethiopia’s $3.4 billion Extended Credit Facility (ECF) arrangement, enabling an immediate disbursement of about $248 million. Announced on January 17, 2025, the decision brings total disbursements under the program to $1.611 billion.
The IMF stated that “implementation of ECF-supported reforms is advancing well” but noted challenges, including a “lower-than-targeted contribution” to social safety nets, attributed to “preparations needed to expand safety net programs and absorb the increased budgetary envelope.”
All quantitative performance criteria were met, the IMF reported, though it added that structural reforms, such as auditing the National Bank of Ethiopia’s accounts, faced delays, with the deadline extended to March 2025.
Ethiopia’s $3.4 billion loan package from the IMF is part of a broader macroeconomic reform program launched by the country in late July 2024. The reforms marked a transition from a crawling peg exchange rate system to a market-based foreign currency regime.
According to Central Bank Governor Mamo Mihretu, the reforms would help Ethiopia secure $10.7 billion in external financing from the IMF, World Bank, and other creditors as part of the reform package.
“The transition to a flexible exchange rate has advanced further,” said Nigel Clarke, IMF Deputy Managing Director, citing “macroeconomic and foreign exchange market policy measures” that have stabilized the parallel market premium to single digits, supported by an increase in foreign exchange supply.
Despite progress, Clarke emphasized the need for “continued tight monetary policy” and further measures to enhance market efficiency. The IMF noted that restricting foreign exchange interventions by the National Bank of Ethiopia (NBE) and carefully sequencing credit growth cap removals with policy rate changes would be critical for stability.
Ethiopia’s efforts in debt restructuring were recognized, with Clarke describing the “substantial progress made towards a debt treatment” under the G20 Common Framework as a “critical step toward restoring debt sustainability.” He indicated that a Memorandum of Understanding with official creditors is expected before the third review, alongside ongoing negotiations with commercial creditors.
The approval of the second review follows a staff-level agreement reached in November 2024 after an IMF mission assessed Ethiopia’s progress.
The first review of Ethiopia’s four-year ECF program was successfully completed earlier. On October 18, 2024, the IMF board approved the first review, allowing Ethiopia to receive $340.7 million. AS
TPLF rejects NEBE deadline for general assembly; accuses federal gov’t of hindering Pretoria Agreement implementation
Ethiopia among worst jailers of journalists in Africa, CPJ says; six detained, five face terrorism charges