The World Bank has granted more than $16 billion in financial assistance to Ethiopia.
The World Bank’s Board of Directors announced that it will provide $16.6 billion in loans and assistance to Ethiopia over the next three years.
According to the World Bank’s website, the financial aid and loans will support Ethiopia’s ongoing economic reforms.
The bank stated that $1 billion of the approved funds will be direct support, while $500 million will be an extended loan.
Additionally, the World Bank has announced several support frameworks to aid Ethiopia’s indigenous economic reforms.
Specifically, $1 billion will be direct aid, $500 million will be for debt payment extension, and $320 million will support Ethiopia through international investment cooperation.
Moreover, $1.15 billion will be allocated to the Multilateral Investment Agency, and $6 billion will be provided for budget subsidies over the next three years.
An additional $2.1 billion will be added to international financial cooperation for investment, bringing Ethiopia’s total financial assistance to $16.6 billion over the next three years, in addition to the $7 billion it currently receives.
In a related development, the Executive Board of the International Monetary Fund (IMF) approved a four-year, $3.4 billion extended credit facility for Ethiopia.
The Washington based organization, IMF board announced that out of the approved funds, approximately $1 billion will be released immediately.
The loan approval followed the Ethiopian government’s implementation of a market-based foreign exchange rate system.
To increase foreign trade, Ethiopia has devalued the Birr by 31%, resulting in one US dollar now being exchanged for 77 Birr.
Several Western countries, including the United States, Britain, and the European Union, have announced their support for Ethiopia’s new economic reforms and pledged to assist in their implementation.
Ethiopia’s economy faces multiple challenges, including the aftermath of the war, the COVID-19 pandemic, climate change, rising living costs, and international pressures.
Currently, Ethiopia’s foreign debt stands at $29 billion, with half owed to China. Ethiopia is seeking an extension of the loan repayment period.
Prime Minister Abiy Ahmed mentioned in a discussion with tax-paying businessmen that Ethiopia has repaid $10 billion in loans over the past five years.
Despite this, other creditors and lending institutions, excluding China, have been hesitant to extend the repayment period.
A month ago, the Ministry of Finance announced a new aid and loan agreement with the World Bank worth $1.72 billion (97 billion birr).
Despite these obstacles, the recent financial support from IMF and World Bank would mark a significant step towards financial stability and economic recovery for Ethiopia.
