Ethiopia reached an agreement with the International Monetary Fund (IMF) for a new financing program valued at $3.4 billion. This deal is a significant milestone for Ethiopia, which has been grappling with high inflation and chronic foreign currency shortages. The IMF announced that the agreement will facilitate an immediate disbursement of approximately $1 billion to help stabilize the country’s economy.
As part of the prerequisites for securing IMF support, Ethiopia’s central bank floated the birr, the national currency, marking a crucial step towards the new financing arrangement and making headway in the country’s prolonged debt restructuring efforts. This move aims to alleviate some of the economic pressures Ethiopia has faced, including its struggle with high inflation rates.
Ethiopia became the third African nation in as many years to default on its debt at the end of last year. The country has been in discussions with the IMF since then, seeking a new lending program after the previous fund-supported program, agreed upon in 2019, was abandoned due to the conflict in the Tigray region. The conflict, which lasted two years, concluded with a peace deal in November 2022.
