Ethiopia is poised to receive $10.5 billion in support over the coming years if ongoing negotiations with the International Monetary Fund (IMF) and the World Bank are successful, Prime Minister Abiy Ahmed announced on Thursday.
The announcement follows Ethiopia’s default on its debt in December, marking the third such default in East Africa in as many years amid high inflation and persistent foreign currency shortages. Reports indicate that Ethiopia is negotiating a $3.5 billion loan under a reform program with the IMF, while also seeking $3.5 billion in budget support from the World Bank and an additional $3.5 billion through debt restructuring.
Analysts suggest that securing IMF support may require Ethiopia to devalue its birr currency, which is currently trading about 50% weaker than the official exchange rate on the black market.
“We’ve been engaged in extensive talks and negotiations with the IMF and World Bank. The process has been challenging and lengthy, spanning five years,” Abiy told lawmakers. “Thanks to the support from friendly nations, it appears many of our proposals have been accepted. If we can finalize these reforms, Ethiopia will receive $10.5 billion in the coming years.”
Abiy also noted that there are certain reforms the government is hesitant to implement immediately, though he did not provide details. “There are areas we believe should be reformed now and others that should remain unchanged. If we can agree on these points, it presents a significant opportunity. This reform agenda could greatly alleviate our debt burden,” the prime minister said.
