The World Bank has approved a $1 billion credit for Ethiopia as the country continues to work on restructuring its debt. This financing is part of a larger $10.7 billion package from international creditors, including the International Monetary Fund. Ethiopia has also secured a $500 million concessional credit from the World Bank’s International Development Association.
The approval of this financing comes after Ethiopia recently floated its birr currency and secured a four-year, $3.4 billion program from the IMF. The country had sought to restructure its debt in 2021 under the G20 Common Framework initiative, but progress was slowed by a civil war in the Tigray region. The completion of debt restructuring by other African countries such as Chad and Zambia has provided momentum for Ethiopia’s efforts.
Despite these positive developments, Ethiopia still faces challenges such as climate change impacts and the post-war reconstruction of Tigray. The decision to move to a market-based foreign exchange rate has also raised concerns about potential inflation and increased living costs, especially for the country’s most vulnerable populations.
Overall, the support from international partners such as the World Bank and IMF is seen as crucial for Ethiopia to address its debt issues and implement economic reforms. The funding provided will help support the country in its efforts to move forward and navigate the complex challenges it currently faces.
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