The Federal Democratic Republic of Ethiopia: Second Review Under the Extended Credit Facility Arrangement and Financing Assurances Review-Press Release; Staff Report; Staff Supplement; and Statement by the Executive Director for The Federal Democratic

The Board approved Ethiopia’s request for a four-year arrangement under the Extended Credit Facility (ECF arrangement) in July 2024 to support the authorities’ Homegrown Economic Reform Agenda. The Fund-supported program addresses macroeconomic imbalances, aiming to restore external debt sustainability, and lay the foundations for high, private sector-led growth. Strong ownership has underpinned early success of reforms, strengthening support for the authorities’ program. Foreign exchange (FX) market functioning is improving; and initial steps to modernize monetary policy, mobilize domestic revenue, enhance social safety nets, strengthen state-owned enterprises (SOEs), and anchor financial stability are promising, with continued commitment needed to sustain their success. Debt discussions with the Official Creditor Committee of the Common Framework are advancing. Staff assesses that there is sufficient progress towards an agreement on the key terms of a debt treatment consistent with reaching a moderate risk of debt distress by the end of the program.