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Ethiopia to get $10.5 billion if IMF, World Bank talks succeed, PM says

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Prime Minister Abiy Ahmed seeks substantial support from international lenders to stabilize Ethiopia’s economy

Ethiopian Prime Minister Abiy Ahmed announced on Thursday that Ethiopia is expecting approximately $10.5 billion in financial aid over the coming years, pending the conclusion of negotiations with international lending institutions.

Ethiopia, Africa’s second most populous nation, has been severely impacted in recent years by armed conflicts, the COVID-19 pandemic, and various climate shocks. The country is engaged in prolonged discussions to secure a support program from the International Monetary Fund (IMF).

There has been speculation that as a condition of IMF aid, Ethiopia may need to devalue its currency, the birr. Addressing parliament, Abiy acknowledged the tough negotiations with the IMF and the World Bank, describing both sides as “stubborn.”

“We have been negotiating with the IMF and World Bank on a wide range of issues,” Abiy said. “Several of our proposals were finally accepted. When this process comes to a successful conclusion, and the reform is approved, we will receive $10.5 billion in the coming years.”

The IMF did not immediately respond to AFP’s request for comment on Abiy’s statements. According to a source familiar with the negotiations, the current program under discussion with the IMF involves around $3.5 billion in financial assistance. Any agreement with the IMF could potentially unlock an equivalent amount from the World Bank.

Ethiopia is contending with approximately $28 billion in external debt, sky-high inflation, and a severe shortage of foreign currency reserves. The country’s credit rating was downgraded to partial default in December by Fitch after it missed a $33 million coupon payment on a Eurobond.

The two-year conflict in Ethiopia’s northern Tigray region, which concluded in November 2022, led to the suspension of numerous development aid programs and budget assistance. When Abiy took office in 2018, he pledged to reform Ethiopia’s closed and state-dominated economy, but progress has been limited since then.

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