ETHIOPIA stands to receive $10.5bn in financial aid over the next few years if ongoing negotiations with the IMF and the World Bank prove successful, Prime Minister Abiy Ahmed announced on Thursday. This financial boost is crucial for the East African nation, which has been struggling with soaring inflation and a severe shortage of foreign currency, leading it to default on its debt in December.
Insiders have revealed that Ethiopia is looking to secure approximately $3.5bn from the IMF through a reform programme. Additionally, the country aims to obtain $3.5bn in budget support from the World Bank and find another $3.5bn in savings via debt restructuring. Analysts suggest that to secure this support, Ethiopia might need to devalue its birr currency, which is currently trading at about 50 percent less than the official exchange rate on the black market.
Prime Minister Abiy Ahmed provided an update on the progress of these talks. ‘We have been engaged in extensive negotiations with the IMF and World Bank. The discussions have been challenging, taking five years due to the tough stance from both sides,’ Abiy told lawmakers. ‘With the support of some friendly nations, it appears many of our proposals have been accepted. If successful, Ethiopia will secure $10.5bn in the coming years.’
Abiy acknowledged that while some reforms are essential, the government is not ready to implement all of them immediately. “There are certain reforms we believe should be implemented now, and others we think should remain as they are for the time being. If these suggestions are accepted and we reach an agreement, it will greatly alleviate our debt burden,’ he said.
The financial support from the IMF and World Bank is seen as critical for Ethiopia’s economic stability and growth. The outcome of these negotiations will significantly impact the country’s ability to manage its debt and stimulate its economy, providing much-needed relief and fostering long-term development.
