The International Monetary Fund (IMF) team recently conducted its final quarterly review under Ethiopia’s Extended Credit Facility (ECF) program, evaluating the government’s progress on key economic reforms. Authorities have successfully met several critical benchmarks required for the third review, demonstrating their ongoing commitment to the program.
As part of these reforms, the Commercial Bank of Ethiopia (CBE) is set to receive funding pledged by the World Bank, with disbursements expected to begin this month.
Since July 29, Ethiopia has been implementing an extended macroeconomic reform program supported by international partners, including the IMF and World Bank.
Under the 48-month ECF arrangement, the IMF approved a loan of USD 3.4 billion, disbursed in installments contingent on achieving reform milestones.
An IMF delegation, led by Alvaro Piris, visited Addis Ababa this week to engage with government officials, financial sector representatives, and private stakeholders. Discussions focused on Ethiopia’s homegrown economic reform agenda and broader economic challenges.
This visit marks the final quarterly review under the ECF. Since the reform was implemented, the IMF delegation has conducted two visits: one in September and another at the end of 2024. Moving forward, assessments will transition to a semi-annual schedule until the program concludes.
Ethiopia has already received nearly half of the funding allocated under its four-year program, which aims to address macroeconomic imbalances, ensure external debt sustainability, and promote private sector-driven growth.
Experts note that the National Bank of Ethiopia (NBE) has made significant progress in line with its agreement with the IMF, including efforts to finalize and publish audited financial statements.
Additionally, the central bank achieved a positive real policy rate ahead of the third review, primarily due to declining inflation rather than an increase in the policy rate.
A major focus of the IMF and World Bank’s support is strengthening Ethiopia’s financial sector. A key aspect of the reform involves the financial giant CBE, which has secured a government commitment to settle debts that public enterprises were unable to pay, a process that has already begun.
Under the agreement with international partners, the Ethiopian government will inject 54.7 billion birr into CBE for capital reinforcement, while the World Bank will contribute USD 650 million.
A World Bank delegation is expected to visit Ethiopia soon, with funds anticipated to start being released before the end of the month.
With the IMF’s final quarterly review completed, the executive board is expected to approve the next disbursement of over a quarter of a billion dollars, bringing Ethiopia closer to achieving its four-year reform objectives.
