IMF Approves Financial Aid for Ethiopia Amid Economic Reforms

The IMF has completed its latest review of Ethiopia's financial program, leading to a $261 million disbursement. Ethiopia's $3.4 billion program includes debt overhaul as part of economic reforms. Maintaining reform momentum and tight monetary conditions is crucial for growth and debt sustainability efforts.

The International Monetary Fund (IMF) announced the completion of its latest review of Ethiopia's financial program, paving the way for the disbursement of approximately $261 million to the East African nation. This review is part of Ethiopia's broader $3.4 billion economic reform package established in 2024.

Central to the program is the restructuring of Ethiopia's external debt, crucial for maintaining the momentum of reforms necessary for sustaining economic growth and reducing poverty. Last month, Ethiopia's government and the IMF reached an agreement on this review, emphasizing the importance of tight monetary policies to continue disinflation efforts.

Recently, Ethiopia also reached a preliminary agreement with bondholders to restructure its $1 billion international bond. This deal, which awaits IMF and bilateral creditor approval, marks a significant step towards restoring the country's debt sustainability. Ethiopia defaulted on its Eurobond two years ago under the G20's Common Framework initiative.

(With inputs from agencies.)