Ethiopia Secures $3.4 Billion IMF Agreement Amid Debt Restructuring

Ethiopia has secured a $3.4 billion agreement with the International Monetary Fund (IMF) and floated its birr currency. The agreement will provide immediate disbursement of $1 billion and assist debt restructuring, which was delayed due to conflict in Tigray. The country is implementing economic reforms to meet IMF requirements.

Ethiopia has secured an agreement with the International Monetary Fund (IMF) for a new financing program worth $3.4 billion, the IMF announced on Monday.

The central bank of Ethiopia floated the birr currency, a critical step towards obtaining IMF support and advancing the long-delayed debt restructuring process. The Horn-of-Africa nation, confronting high inflation and chronic foreign currency shortages, defaulted on its debt last year, becoming the third African economy to do so in recent years.

Following the abandonment of its last fund-supported program due to the conflict in Tigray, Ethiopia has been negotiating with the IMF since last year to establish new financial support. As previously reported, Ethiopia sought approximately $3.5 billion from the IMF.

The IMF stated that the agreement includes an immediate disbursement of about $1 billion. Africa's second-most populous country initiated a debt restructuring request under the G20's Common Framework in early 2021, but progress was hindered by the two-year civil war in Tigray.

In response, the government in Addis Ababa introduced several economic reforms, attributed to the negotiations for the new IMF program, including the recent adoption of an interest rate-based monetary policy.