The International Monetary Fund’s Executive Board has approved a three-year $2.9 billion financing package to support Ethiopia’s economic reform programme.
The IMF explains in a statement that the agreement is supported by the Fund’s Extended Credit Facility (ECF) and Extended Fund Facility (EFF), which “aims to support the authorities’ implementation of their ambitious reform agenda and catalyze concessional donor financing”.
The Ethiopian economic reform programme will focus on addressing the foreign exchange shortage and transitioning to a more flexible exchange rate regime, at the same time working to strengthen oversight, regulation and management of state-owned enterprises.
According to the International Lender, this facility is will ensure more earning for poverty-reduction initiatives and essential infrastructure upgrades. Built on financial sector reforms that will support private investment and modernize the monetary policy framework; and strengthening of the supervisory framework and financial safety nets.
Ethiopian Prime Minister Abiy Ahmed pledged to undertake economic reforms when he took office last year, with a focus on leveraging private sector investment to help provide jobs for Ethiopia’s teeming unemployed youth.
Foreign exchange shortages have worsened in the past five years as the government spent heavily on infrastructure before export earnings from new sectors such as manufacturing takes off.