Reuters has reported that Ethiopia is currently in talks with the International Monetary Fund (IMF) to secure a $3.5 billion loan aimed at supporting its ongoing economic reform and addressing its financial crisis.
The report highlights that Ethiopia has formally requested a special loan from the IMF to assist in covering its annual budget deficit.
During a meeting with international bond buyers last week, government officials expressed confidence in reaching a loan agreement with the IMF within the first three months of 2024.
The report also indicates that the country’s foreign currency reserve for import trade is less than one percent.
In addition to engaging with the IMF, Ethiopia is actively seeking a $3.5 billion budget subsidy from the World Bank to address its budget shortfall.
Beyond these two institutions, Ethiopia currently carries a foreign debt of $28 billion from China, the European Union, and the African Development Bank, as stated by the Ministry of Finance.
Ethiopia’s economy is facing significant challenges due to ongoing war, the COVID-19 pandemic, conflicts, and other international issues.
In response to these challenges, the government has appealed to lending institutions to extend the loan repayment period to alleviate the pressure from foreign debt.
China, a major lender providing over $10 billion to Ethiopia, has announced a two-year extension of the repayment period.
Discussions are ongoing with other creditor countries and institutions to negotiate similar extensions for Ethiopia’s loan repayment period.
Furthermore, Ethiopia has formally requested a new loan of $10 billion from both the IMF and the World Bank. The institutions have confirmed that they are currently evaluating the conditions for granting the loan.
The Ministry of Finance has reported damages exceeding 1.5 trillion birr in the two-year-long war in northern Ethiopia and other affected regions.
This conflict has resulted in the destruction of infrastructure funded through loans and public funds, leading to an estimated total loss of $28 billion for the country.
Another war erupted in the Amhara region last April when the federal government disbanded the special forces of the Amhara region, citing the need for the ‘reorganization of the regional special forces.’
The ongoing conflict between government security forces and Fano militants has created a situation in the region that is beyond control. Consequently, the House of Representatives declared a six-month state of emergency in July.
Despite the government’s claims of peace and stability in the region, conflicts persist in many areas, leading to disruptions in transportation activities.
Due to the ongoing conflict in the Amhara region, internet access has been cut off, and the government is being urged to restore internet access as it is considered a violation of citizens’ right to access information.
