The World Bank's Board of Executive Directors on Tuesday approved a 1.5 billion dollars financing package for Ethiopia to support home-grown economic reforms, the bank said in a statement.
The "Ethiopia First Sustainable and Inclusive Growth Development Policy Operation" includes a $1 billion grant and $500 million in concessional credit from the World Bank's International Development Association (IDA).
The financing aims to help Ethiopia transition to a more inclusive economy that allows the private sector to play a bigger role in driving growth, the World Bank said.
Key reforms supported by the operation include measures to address macroeconomic imbalances, expand trade opportunities, improve financial sector stability and competition, as well as increase fiscal transparency and the performance of state-owned enterprises.
The package also includes provisions to expand social safety nets to protect poor and vulnerable households during the economic transition.
"Successful implementation of these reforms can help the country reach its full potential so more Ethiopians can thrive," said Maryam Salim, World Bank Country Director for the region.
The World Bank is one of Ethiopia's largest development partners, providing over two billion dollars in concessional financing annually through IDA. Its total portfolio of commitments in the country stands at 15.5 billion dollars.
Looking ahead, the World Bank plans to provide around six billion dollars in new IDA commitments over the next three fiscal years and support economic reforms through fast-disbursing budget support. This implies a total financial package of over 16.6 billion dollars in undisbursed and future commitments available over the next three years, the statement said.
The 16.6 billion dollars financing package over the next three years includes $6 billion in new IDA commitments, 2.1 billion dollars in IFC investments, and 1.15 billion dollars in MIGA guarantees, in addition to the current 15.5 billion dollars in undisbursed World Bank commitments in Ethiopia.
IMF yesterday approved 3.4 billion dollars in financing for Ethiopia, with one billion dollars of that to be disbursed immediately.
Both the World Bank and the IMF assistance came just after Ethiopia liberalized its local currency, a prerequisite Bretton Woods institutions require for funding.