Ethiopia has cleared the first test of its ambitious economic overhaul backed by the International Monetary Fund (IMF), securing sign-off from the lender's staff after waiting over three years.
Formal completion of the review by the IMF Executive Board would give Ethiopia access to financing of approximately 345 million dollars, the IMF said in a statement released yesterday.
IMF mission chief Alvaro Piris announced yesterday that technical staff in discussions with Ethiopian officials had given their approval on the Horn nation's progress under the tentative US$3.4 billion program.
"Ethiopia’s economic reform program, including the transition to a market-determined exchange rate, is advancing well," Piris said, referring to policy shifts like the move to a flexible exchange rate in July.
He said the maneuver had helped address acute forex shortages "with little disruption to the broader economy," lauding Ethiopian authorities for sticking to tough monetary steps and budget support for citizens.
The non-binding staff review now goes to the IMF board for formal approval alongside $345 million in funds, a much-needed injection as Addis Ababa works to stabilize its finances.
Looking ahead, steady advancement of the homegrown economic reform plan will help anchor macroeconomic stability and support economic growth, according to Piris.
"Continued tight monetary policy and the end of monetary financing of government will reduce inflation while a temporary fiscal spending package will help cushion the socio-economic impact of the reforms," he said.
