Supporting Ethiopia’s home–grown economic reform, the International Monetary Fund (IMF) has agreed with Ethiopian government at technical level to provide the latter 700% more than its quota.
This is indicated by Eyob Tekalign (PhD), State Minister of Finance of Ethiopia, who briefed journalists in his office this afternoon. “Around 60% of the financial resource we need to implement our three years economic reform is secured from the World Bank and the IMF,” he said.
He noted that Ethiopian government has reached agreement with the IMF and the World Bank at technical level securing over half of the external financing the government is expecting to implement its home-grown economic reform over the coming three years.
The boards of IMF and the World Bank are expected to approve the decision in the coming few weeks, according to Dr. Eyob. “In general our economic reform is going well on track as we planned,” he said.
In its statement this evening following the announcement made by Dr. Eyob, the IMF has also released a press statement indicating that it has reaches staff-level agreement on a $2.9 billion financing package with Ethiopia.
“A team led by Ms. Sonali Jain-Chandra visited Addis Ababa from October 29 to November 8, 2019 to hold discussions on the 2019 Article IV Consultation for Ethiopia, and the authorities’ request for a three-year US$2.9 billion (SDR 2.1049 billion) financing package that could be supported by the IMF under its Extended Credit Facility (ECF) and Extended Fund Facility (EFF),” IMF said.
He stated that for the past four or five months, the country has managed to mobilize the financial resources needed almost meeting its monthly targets 100%.
He further indicated that the financial resources that are needed to implement the economic reforms are also expected from other bilateral and multilateral sources such as the European Union, African Development Bank and friendly nations, including Qatar and Saudi Arabia with minimal interest rate.
It is estimated that the Government of Ethiopia needs a total of $9 to $10 billion to fully implement its home-grow economic reform over the coming three years.
If all goes as planned, the government expects lifting millions of Ethiopians out of the poverty in ten years’ time by building one of the strongest economies in Africa by leading the citizens to prosperity, according to Dr. Eyob.
The fact that the government recently abandoned central banks directive, which forces all banks to use 27% of the money they allocate for loan to purchase government bond, is now allowing the banks to cut their interest rates on loans they are providing to other borrowers.
In relation to partial privatization of Ethio Telecom and ending the state monopoly opening the sector for global players, Dr. Eyob indicated that all the activities are well on track and will be concluded during the first quarter of 2020.
He stated that the recent measures taken by the government such as, tax exemption on agricultural tractors and the like, as well as new strategies developed to improve performances of mining and tourism sectors along with the recent excise tax directive among others, are expected to bring positive results in the months and years to come.
Dr. Eyob also stated that the decision of the government to make treasury bill bid competitive and open for all has also encouraged banks to compete, paving the way for the stock market Ethiopia is planing to introduce by 2020.
Meanwhile, he mentioned that high inflation rate and export performance, which has been causing huge trade deficit, are still challenges. He noted that his government is working hard to address by solving related issues such as, logistics modernization and the like.
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