Ethiopia on the Brink: IMF Loan Review Set to Boost Economic Reforms

Ethiopia is set to reach a preliminary agreement on its $3.4 billion IMF loan program and anticipates bondholder debt talks by summer. State Finance Minister Eyob Tekalign is optimistic about the progress, including economic reforms and debt restructuring, and continues discussions with China and the U.S. for financing projects.

Ethiopia is poised to secure a preliminary accord regarding the third review of its $3.4 billion loan program with the International Monetary Fund (IMF) by early this week, with formal debt negotiations with bondholders anticipated in the summer, according to State Finance Minister Eyob Tekalign.

The East African country, embarking on comprehensive reforms as part of a four-year IMF agreement made last July, aims to float its currency, the birr, and achieve debt restructuring. Eyob expressed satisfaction with the program's progress at the IMF and World Bank Group spring meetings, citing significant achievements in reserves, inflation, and exports.

Concurrently, discussions with holders of Ethiopia's $1 billion international bond in Washington have been fruitful, with substantial debt rework talks likely to commence in the summer. Despite challenges regarding liquidity or solvency issues, Ethiopia continues its external debt restructuring under the G20's Common Framework, engaging with China and the U.S. to fund key infrastructure projects.

(With inputs from agencies.)