The World Bank through the International Development Association agreed on a $1.5 billion financing for Ethiopia as part of a $16.6 billion package it’s committing to provide the nation over three years.
The development policy operation facility consists $1 billion grant and $500 million concessional credit for reforms that will help Ethiopia open up its economy, strengthen the financial sector, expand trade and improve fiscal transparency, the World Bank said in a statement on Tuesday.
“Subject to the Board’s approval of new operations and availability of IDA resources, this implies a total financial package of over $16.6 billion in undisbursed and future commitments available over the next three years,” it said.
The financing comes shortly after the International Monetary Fund approved a $3.4 billion four-year economic reform program for the Horn of Africa nation. Ethiopia needed an IMF program in place before it could resume debt restructuring talks under the Group of 20-backed common framework mechanism.
Ethiopia has been seeking to restructure some of its $28.4 billion of external loans for years. To clinch the IMF funding, it allowed its currency to float freely, which saw the birr plunge 23%.
More on the World Bank Package:
- The IDA will provide some $6 billion in new commitments over the next three fiscal years and support economic reforms through “fast-disbursing budget support”
- The International Finance Corporation is planning about $2.1 billion in investments, while the Multilateral Investment Guarantee Agency expects to grow its engagement
- Currently, Ethiopia receives more than $2 billion concessional financing annually from the IDA, with roughly half of that amount in grants.
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