The International Monetary Fund (IMF) has approved a $3.4 billion bailout for Ethiopia, marking a significant step in supporting the country’s economic reforms over the next four years. This decision is expected to aid Ethiopia in restructuring its debt and foster private-sector growth.
Ethiopia has been grappling with severe foreign currency shortages and high inflation, largely due to the devastating two-year civil war in Tigray, which ended in 2022.
The IMF’s managing director, Kristalina Georgieva, described the approval as a “landmark moment,” praising Ethiopia’s commitment to transformative reform.
The bailout comes after Ethiopia floated its currency, the birr, which has since depreciated by nearly 30% against the dollar. The IMF will immediately disburse approximately $1 billion to address Ethiopia’s balance of payments needs and support the national budget.
In addition to the IMF support, Ethiopia is negotiating with international creditors to restructure its debt. The country had previously defaulted on its sovereign bond in December, becoming the third African nation to do so in three years.
Ethiopia’s new economic program aims to drive private-sector growth and enhance spending on health, education, investment, and social safety nets.
The IMF anticipates that the program will stimulate additional external financing and support ongoing debt restructuring efforts.
The Ethiopian government is seeking over $10 billion in aid from international financial institutions like the IMF and the World Bank to bolster its recovery and development efforts.
