IDA to finance third phase of Productive Safety Net Program

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The International Development Association (IDA) is going to finance the third phase of the Productive Safety Net Program of Ethiopia designed to curb food insecurity in drought prone areas of the country. The financing agreement between the two parties was signed on May 04, 2012.
The House of Peoples Representative is expected to approve the loan agreement. The approval of the agreement means pumping USD 370 million to the third phase of the Productive Safety Net Projects the country is implementing.
After discussing about the importance of the loan agreement last Tuesday, the house referred the document to the Budget and Finance Affairs Standing Committee for further scrutiny.
According to the loan agreement document submitted to house, the majority of the loan will be used for safety nets grants. It will consume USD 290 million of the total loan. The remaining USD 80 million will be disbursed for a drought risk financing facility (USD 70 million), institutional support (USD 5 million) and support for household asset building (USD 5 million).  
The money which is gained through soft loan will be paid over forty years. It is granted with a grace period of 10 years. The association will charge a service charge of 0.75 percent and a commitment fee of 0.5 percent on an unused loan disbursement on time. 
The main goal of productive safety net program is to enable households in food insecure areas of the country to become food self-sufficient. More than 7.5 million people from eight regions of the country are currently participating in productive safety nets program. So far the program graduated close to 1.7 million people. 
The house also discussed and referred a loan agreement amounting to a little over USD 95.6 million gained from the Export Import Bank of China to the committee. The bank agreed to finance the Addis Ababa Deep Well water supply.