The World Bank has approved $1.5 billion in financing for Ethiopia to support its debt restructuring efforts. This funding is part of a larger $10.7 billion package from the IMF, World Bank, and other creditors. Ethiopia recently secured a $3.4 billion program from the IMF and implemented a market-based foreign exchange system.
The World Bank’s grant of $1 billion and a $500 million credit line will directly support Ethiopia’s budget, marking the first time such assistance has been provided to the country. The funding is aimed at facilitating economic reforms and enabling a transition to a more inclusive economy.
Despite progress in its debt restructuring, Ethiopia still faces challenges such as the impact of climate change and post-war reconstruction efforts in the Tigray region. The country’s move towards a market-based foreign exchange rate has been met with mixed reactions, with concerns about potential inflationary effects.
