WORLD BANK AND IMF BACK ETHIOPIA’S ECONOMIC TURNAROUND WITH $1B BOOST

The World Bank $1 billion funding to support Ethiopia's economic reform programme.

Ethiopia Finance Economic reform agenda Support package Africa Economy Imf World bank.

Ethiopia’s ambitious economic reform agenda received a major vote of confidence as the World Bank approved a $1 billion support package, reinforcing international backing for the country’s recovery and transformation efforts.

Announced by the Ministry of Finance on Friday, the funding, comprising a $650 million grant and a $350 million low-interest loan, aims to support financial sector stabilization, boost trade competitiveness, and strengthen domestic revenue mobilization. The financing is part of a broader reform initiative that includes floating the birr, liberalizing key sectors, and addressing macroeconomic imbalances.

The World Bank emphasized that the funding will deepen structural reforms and act as a buffer against economic shocks, especially as the country navigates post-conflict reconstruction and climate-related vulnerabilities. The institution also hinted at further support, stating that, subject to board approval and resource availability, Ethiopia could access up to $5 billion through the International Development Association (IDA) over the next three years.

This development follows closely on the heels of the International Monetary Fund’s (IMF) latest review of Ethiopia’s $3.4 billion loan programme, which unlocked an additional $262.3 million in funding. The IMF praised the government’s ongoing reforms but urged continued focus on improving the foreign exchange system, enhancing fiscal transparency, and restoring debt sustainability.

Ethiopia, once among Africa’s fastest-growing economies, has faced severe challenges in recent years from armed conflict and inflation to foreign exchange shortages and ballooning debt. However, the recent steps to liberalize its economy, particularly in sectors like telecoms, banking, and logistics, are seen as pivotal to attracting investment and reigniting growth.

Finance Minister Ahmed Shide welcomed the World Bank’s support, calling it “a strong endorsement of Ethiopia’s reform path” and a signal of the international community’s trust in the country’s long-term vision.

With the IMF and World Bank now aligned in support of Ethiopia’s direction, analysts suggest the dual endorsement may pave the way for crucial debt restructuring negotiations under the G20’s Common Framework talks that have yet to be finalized since Ethiopia’s request in 2021.

As Ethiopia moves forward, its success will hinge on sustaining reform momentum, ensuring social protections, and maintaining transparency. But for now, the multilateral backing signals a potential turning point for the East African nation’s economic future.

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WORLD BANK AND IMF BACK ETHIOPIA’S ECONOMIC TURNAROUND WITH $1B BOOST

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