Ethiopia to get US$248 million as IMF Executive Board completes 2nd review 

Borkena

Toronto – The International Monetary Fund (IMF) on Friday announced that the Executive Board has finalized the second review of “the arrangement under the Extended Credit Facility (ECF) for Ethiopia.”

The decision is to make US$248 million available to Ethiopia as part of the US$ 10.7 billion support package.  The money to be released is intended to “help” Ethiopia with ” its balance of payments needs.”  Ethiopia has so far received about US$1.611 billion under the IMF’s new arrangement since the introduction of macro economic reform last year. The reform was framed as ‘Homegrown Economic Reform Agenda (HGER)”  with the aim  “to address macroeconomic imbalances and lay the foundations for private sector led growth,” as IMF puts it. 

The Executive Board reflected what appears to be a positivist assessment of Ethiopian government implementation programs introduced with the Macro economic reform measures. In a move to implement an apparent prescription from the IMF, the Ethiopian government depreciated the Ethiopian birr by more than 100 percent starting July 2024. 

“The Ethiopian authorities have demonstrated strong commitment to achieving the objectives of the Fund-supported program. Implementation of ECF-supported reforms is advancing well,” The board is cited as saying. 

It appears that one of the conditions considered in the second review spendings to social safety news. The update from the IMF said  “The government’s contribution to the targeted social safety nets (indicative target) was lower-than-targeted mostly due to preparations needed to expand safety net programs and absorb the significantly increased budgetary envelope. The structural benchmark on finalizing the audited accounts of the National Bank of Ethiopia (NBE) has been reset from end-January 2025 to end-March 2025 to allow time for completion.” 

The IMF also said that Ethiopia’s Foreign exchange market is improving. New report from Wazema radio on Saturday indicated that the gap between the official exchange rate and the parallel market exchange rate is growing. While the banks are still exchanging at a rate of 124, US money is selling for 153 Ethiopian Birr in the black market. One of the stated goals of currency devaluation introduced in July 2024 was to narrow difference between official and parallel market rates of exchanges. 

IMF also sees in a positive light that domestic fiscal revenue is growing in Ethiopia. The Ethiopian government has recently been introducing a range of new taxes in a range of areas. Analysts and observers tend to think that the taxes will have a crippling effect in light of unbearable economic hardships for most Ethiopians. 

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