Ethiopia nears $10.5b support agreement

Ethiopia is set to receive $10.5 billion in support over the next few years if negotiations with the International Monetary Fund (IMF) and World Bank succeed, Prime Minister Abiy Ahmed announced on Thursday. The country, grappling with high inflation and foreign currency shortages, defaulted on its debt in December.

Ethiopia aims to secure $3.5 billion from the IMF, $3.5 billion in budget support from the World Bank, and save another $3.5 billion through debt restructuring, sources told Reuters. Analysts suggest Ethiopia may need to devalue its birr currency to secure IMF support.

“We have been having a wide range of talks, negotiations and discussions with the IMF and World Bank. Because we were a bit tough with them and they were also tough with us, the (talks) took five years,” Abiy told lawmakers. “Now with the support of some friendly countries, it seems like many of our ideas have been accepted. If this succeeds and we can agree on the reforms, Ethiopia will get $10.5 billion in the coming years,” he said.

Abiy also mentioned that some reforms were not immediately feasible. “There are some areas we think should be reformed now, and there are things we think should stay as it is. If all these suggestions get accepted and we agree, there is an opportunity ahead of us. This reform agenda will play a huge impact in alleviating the debt burden,” he stated.

Attribution: Reuters.