News IMF stands behind Ethiopia’s homegrown economic reforms
IMF Stands Behind Ethiopia’s Homegrown Economic Reforms
June 17, 2023
The International Monetary Fund (IMF) has reaffirmed support for Ethiopia’s economic reform agenda, which aims to address foreign exchange shortages and macroeconomic challenges.
Authorities are crafting a second round of economic reforms after the first failed to spur meaningful changes, according to reports. Ethiopia’s economic woes have worsened due to war, drought and global challenges stemming from the pandemic and Russia-Ukraine conflict.
Sources say Ethiopia is seeking at least USD two billion in IMF assistance, which the lender is willing to provide subject to certain conditions.
Financing assurances from creditors and donor commitments will likely be essential for any IMF aid to be approved and disbursed, officials say.
IMF Communications Director Julie Kozack confirmed on June 8, 2023 that Ethiopia has requested financial support to address economic shocks.
“The economic challenges are significant for Ethiopia and they include food insecurity, humanitarian needs, post-conflict reconstruction, high inflation, shortages of foreign exchange, and assorted shortages of some imported goods,” Kozack said.
Discussions are ongoing with Ethiopian authorities on policies that could support an IMF program, according to her.
Kozack noted a potential program “would aim to support the authority’s reform agenda, address macroeconomic vulnerabilities and unlock economic potential.”
“The new program would require a clear commitment from development partners and financing assurances from creditors under the G20’s common framework to ensure that it can meet objectives,” Kozack said.
The reform agenda currently being drafted by Ethiopian authorities aims to liberalize key sectors like banking and retail trade in order to ease the foreign exchange shortage. It also seeks to correct macroeconomic imbalances.
However, Kozack said a new IMF program for Ethiopia would require “a clear commitment from development partners and financing assurances from creditors under the G20’s common framework” in order to succeed.