Ethiopia is currently in discussions with the International Monetary Fund (IMF) regarding a potential $3.5 billion loan deal, Reuters reported, citing knowledgeable sources.
The financing would support Ethiopia’s homegrown economic reform agenda, which includes introducing a market-led foreign exchange regime and addressing macroeconomic challenges.
Ethiopian officials indicated during a recent call with international bondholders that the country aims to finalize a staff-level agreement with the IMF by early 2024.
Since 2022, Ethiopia has sought "exceptional access" to IMF funds exceeding normal limits by over 100%.
However, the exact request amount has not been disclosed. In April, sources told Reuters the country was negotiating to borrow at least $2 billion, almost two years after a $1.5 billion concessional facility expired contingent on reaching a debt restructuring deal with creditors.
The total IMF financing remains uncertain, including potential support through the new Resilience and Sustainability Trust for low-income and vulnerable middle-income nations.
An IMF spokesperson said macroeconomic forecasts and external financing needs are still under discussion, including potential financial support from the IMF and other development partners.
According to an investor presentation viewed by Reuters, the $3.5 billion figure is tentative and subject to negotiation. Ethiopia also aims to secure $3.5 billion in budget support from the World Bank.
Sources note Ethiopia’s government has identified an approximate $11.5 billion financing gap until 2027/2028, while current foreign reserves only cover imports for 0.2 months.
This month, the Paris Club stated Ethiopia's agreement with bilateral lenders excluding China could be invalidated if an IMF loan is not secured by March 31, 2024.
The presentation also detailed a recent debt relief deal with Chinese lenders suspending some payments for two years at a reduced interest rate, sources said.
Ethiopia initiated debt restructuring under the G20 Common Framework in early 2021. But progress stalled due to a 2020 civil war, delaying creditor negotiations on a solution.
After missing a $1 billion 2024 bond interest payment on December 11, S&P Global and Fitch downgraded Ethiopia to default last week.
