Saturday, June 15, 2024

The wait for IMF financial aid continues


By our staff reporter

Ethiopia’s demand for access to financial support from the International Monetary Fund (IMF) still remains in the grey despite over half a year wait.

In the latest press briefing held on Thursday, September 28 the Director of Communication Department for the IMF, Julie Kozack, shared economic support progresses but did however not touch upon the prior request.

As Julie expressed, discussions are underway on economic policies and reforms that could potentially be supported by an IMF program, “An IMF program would support the Homegrown Economic Reform Agenda (HGER II) to help address macroeconomic vulnerabilities and help unlock Ethiopia’s considerable economic potential.”

The briefing that the Director mentioned about Ethiopia did however not have any progress compared with similar statements on the regular press conference that she cited the past months.

As reports reveal, Ethiopia has been looking for a fund worth about USD two billion from the international lender to support its HGER II. IMF on its end had announced that it expects support and assurance from Ethiopian partners and financers to make available the requested amount of money.

On her briefing, Kozack said that a new program would also require clear commitments from development partners and financing assurances from creditors under the G20 Commons Framework (CF) to ensure that it can meet its objectives.

Early 2021, Ethiopia was a pioneer when it came to demanding for a debt rework under CF when the G20 countries showed their keen interest to support poor countries for re-profiling poor countries that were on economic pressure in connection to the global pandemic debt.

However, the country is yet to get the results it hoped for from its global partners. This derailment is thought to stem from the northern Ethiopia conflict that was sparked in November 2020, where western countries pressured the central government because of the war. As part of pressuring the government, they did not show their interest to support Ethiopia’s request for debt rework that made other major financers like China to pause from any action.

The IMF Director on her briefing reminded that Ethiopia has been the subject of multiple shocks, including six consecutive years of drought, the pandemic, domestic conflict, and the impact of Russia Ukraine war, “Economic challenges are significant, including food insecurity, humanitarian needs, post conflict reconstruction, high inflation, and shortages of foreign exchange and some imported goods.” she said adding, “We have received a request for financial assistance to help Ethiopia address these challenges.”

However demands that IMF put were not fulfilled, which caused delays for the Ethiopian wants to access fund from the IMF.

To support the first HGER to maintain macroeconomic stability and improve living standards, IMF approved USD 2.9 billion through a three year arrangements under the Extended Credit Facility and the Extended Fund Facility (EFF) for Ethiopia.

But only about 10 percent of the approved amounts were dispersed while the remaining amount was paused because of the conflict between the central government and TPLF.

The IMF mission had visited Addis Ababa on late March in a ten day visit to hold discussions with the relevant authorities’ which had requests for IMF to support their reform program. Since then the international partner stated that discussions were underway to approve the requested fund. In different occasions, including the Spring IMF and the World Bank joint meeting and Prime Minister Abiy Ahmed’s US visit, Ethiopian officials have got a chance to meet with IMF leaders but any significant development is not seen.

IMF stated that the country debt sustainability is one of the issues mentioned regarding approving the new fund but there is also some policy changes that it looked into.

However some sources from the government’s side told Capital that following the peace agreement between the central government and TPLF in November 2022 some major partners like the US, which is the biggest shareholder of IMF, are looking for further implementation of the peace agreement on the ground in order to roll out financial support. Experts said that further discussions may be in the works for the upcoming World Bank-IMF annual meeting that will be held next week in Ma

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