Washington DC, USA
The first evaluation report on Ethiopia’s macroeconomic reform will be released in the next few days, the International Monetary Fund (IMF) reveals. It said that authorities need to keep dealing with any issues that come up in the foreign exchange markets.
According to IMF Mission Chief for Ethiopia Alvaro Piris Chavarri, Ethiopia’s three-month-old reform initiative got off to a great start.
He told Capital, “I believe the program has gotten off to a great start, and the authorities have acted decisively in a well-prepared way.”
“Although there is obviously still more to be done, I believe the exchange rate reform has gone well. There are still many obstacles to overcome, but this is a great beginning,” he continued.
“We visit periodically in the context of our program; we have just completed the first review, so that report will be published in the next few days,” according to the mission chief, who just traveled to Ethiopia.
Piris claims that the IMF’s fundamental assessment is that things have gotten off to a great start and that the key takeaway is to maintain the momentum and steer the reform program in the right direction.
The next evaluation is scheduled to start shortly and is likely to be completed by the board by January.
He said the program’s following phase centers on reforming monetary policy and starting to expand on the revenue mobilization efforts that were taken initially.
“There is a lot of work to be done, but I think the agenda is well laid out already, so it’s a question of sticking to the course,” he says. “So these are two key areas in the program, but certainly they need to keep dealing with any issues that come up in the exchange rates, in the foreign exchange markets, and also the state-owned enterprises reforms in the program are also important.”
Piris stated that talks are still ongoing with regard to debt restructuring and negotiations with lenders, including private creditors.
“I don’t have any specific remarks on their progress. We are not involved directly in the discussions. Naturally, our contributions are limited to our macroeconomic and debt sustainability analyses. Thus, such conversations are still going on,” he told Capital.
IMF Managing Director Kristalina Georgieva met with Ethiopian Finance Minister Ahmed Shide and National Bank of Ethiopia Governor Mamo Esmelealem Mihretu at a side meeting of the IMF and World Bank Group annual conference that ended yesterday.
Mamo declined to provide specifics but told Capital that the conversation with the Managing Director and others about the ongoing macroeconomic change was productive.
From September 17 to 26, 2024, an IMF staff team headed by Alvaro Piris traveled to Addis Ababa to discuss reform progress and the policy goals of the authorities in relation to the first evaluation of Ethiopia’s economic program funded by the IMF’s Extended Credit Facility (ECF).
After the visit, the IMF Executive Board authorized the payment of USD 340.7 million to Ethiopia on October 18. This amounts to around 10% of the ECF’s USD 3.4 billion.
On July 29, the IMF Executive Board authorized a total of SDR 2.556 billion, or around USD 3.4 billion, to promote macroeconomic reform; of that sum, USD 1 billion was transferred right away.
Ethiopia is undergoing significant changes as a result of the macroeconomic reform, including the opening up of the foreign exchange market.
