IMF Reaches Staff-Level Agreement with Ethiopia on Economic Reforms

The International Monetary Fund (IMF) has announced a staff-level agreement with Ethiopian authorities on key economic policies, marking a significant step toward concluding the first review of a four-year, USD3.4 billion Extended Credit Facility (ECF) arrangement. This agreement, pending approval from the IMF Executive Board, would enable Ethiopia to access approximately USD345 million in financing.During a visit to Addis Ababa from September led by Mr. Alvaro Piris, the IMF team discussed the progress of Ethiopia’s homegrown economic reform program. A notable highlight of these reforms is the adoption of a floating exchange rate regime in late July, which has effectively narrowed the gap between the official and parallel exchange markets.

Mr. Alvaro stated, “Ethiopia’s economic reform program is advancing well,” emphasizing that the new exchange rate system has alleviated the previously acute shortage of foreign exchange that hindered economic activity.

The implementation of these reforms is expected to bolster macroeconomic stability, enhance foreign exchange availability, and support sustainable economic growth. In particular, a commitment to tight monetary policy and the cessation of monetary financing for the government is aimed at reducing inflation, while a temporary fiscal spending package will help mitigate the socio-economic effects of the reforms.

The IMF team expressed gratitude for the constructive discussions with Ethiopian officials, including Minister of Finance Ahmed Shide and National Bank Governor Mamo Mihretu. Continued engagement with banks and private sector representatives further underscores the collaborative effort to ensure the success of the IMF-supported economic program.