The International Monetary Fund (IMF) has completed the fourth review of Ethiopia’s programme under the Extended Credit Facility (ECF), paving the way for an immediate disbursement of about $261 million (Sh33.6 billion).


The lender on Friday said the funds are intended to help the country meet pressing balance of payments and fiscal financing needs.


Notably, the latest release brings total disbursements under the ECF arrangement to about $2.183 billion (Sh281.4 billion).


Ethiopia’s 48-month ECF arrangement, approved on July 29, 2024, amounts to SDR 2.556 billion, equivalent to about $3.4 billion (Sh438.1 billion at the current exchange rate).


The Special Drawing Right (SDR) is an interest-bearing international reserve asset created by the lender to supplement member countries’ official reserves, acting as a claim on freely usable currencies rather than a currency itself.


Its value is based on a basket of five major currencies: the US dollar, the Euro, the Chinese Renminbi, the Japanese Yen and the British Pound Sterling


Ethiopia’s programme with the lender is designed to support the government’s Homegrown Economic Reform Agenda (HGER), which seeks to address macroeconomic imbalances and lay the groundwork for private sector-led growth.


According to the IMF, overall programme performance has been broadly in line with agreed commitments, with all quantitative performance criteria and most indicative targets met.


A new performance criterion limiting foreign exchange intervention to auctions has been introduced, while some structural benchmarks were missed due to implementation delays, including the publication of Ethiopian Investment Holdings’ financial statements.


The Fund says maintaining a tight monetary stance remains appropriate to anchor the country’s inflation expectations and support further declines in inflation, as authorities continue reforms to strengthen the functioning of the foreign exchange market.


It adds that revenue mobilisation has also been strong, aided by recent tax policy reforms aimed at broadening the tax base and raising revenue potential.


Progress on debt restructuring is also highlighted, with the IMF welcoming advances under the Common Framework, including the signing of the Official Creditor Committee Memorandum of Understanding.


Notably, discussions with private external creditors are ongoing, as Ethiopia seeks to restore debt sustainability and secure a comprehensive debt treatment.


“The authorities continue to make progress in advancing their ECF-supported economic reform agenda. Measures to enhance the foreign exchange (FX) market, modernise monetary policy, mobilise fiscal revenues, and advance the financial regulatory agenda continue to show encouraging results, with better-than-anticipated macroeconomic outcomes,” IMF Deputy Managing Director and Chairman Nigel Clarke said.