IMF Mission Preserves Ambiguity on Ethiopia's Macroeconomic Standing for Second Consecutive Year


IMF Mission Preserves Ambiguity on Ethiopia's Macroeconomic Standing for Second Consecutive Year

In a persisting aura of indecision, the International Monetary Fund (IMF) maintains its opacity about macroeconomic performance and impending financial support to Ethiopia for the second successive year. Questions around the nature, extent, and preconditions of IMF's support remain unanswered, sustaining an air of scepticism about international financial support to Ethiopia. The IMF mission, led by Alvaro Piris, visited Addis Abeba between September 25 to October 3, 2023. Central Bank Governor Mamo Mehiretu and Finance Minister Ahmed Shedie met the IMF team this week at the annual World Bank and IMF joint meetings in Marrakech, signalling a continued yet cautious engagement with Ethiopian authorities. The IMF team said it recognises Ethiopia's "notable strides towards economic stabilisation," attributing its statement to efforts in taming inflation and stabilising the fiscal and monetary policies. However, Piris and his team's sentiment is evident in withholding a firm commitment to immediate financial backing. In a statement issued today, Piris acknowledged the economic reforms undertaken by the Ethiopian authorities, particularly highlighting the "significant fiscal and monetary tightening," which he said laid "a solid groundwork for the success of Ethiopia’s Homegrown Economic Reform Agenda." "The mission made good progress in discussing how the IMF could support the authorities’ economic program," said Piris, pointing towards a positive dialogue yet stopping short of revealing any conclusive deal for the aid and reforms Ethiopian authorities tabled. Despite this, the reserved undertones of the discussions cast a familiar shadow of ambiguity that surrounded last year's meetings, leaving observers in a lurch about IMF's support for Ethiopia. Macroeconomic pundits note that inflationary pressure, social unrest, political instability, security challenges and the lingering impact of the civil war have besieged Ethiopia’s economic trajectory. However, Ethiopia trails into yet another year of fiscal ambiguity, wherein its leaders` attempts to secure international financial support to propel their economic reform agenda forward have been met with cautious, non-committal interactions from the IMF.

[ssba-buttons]

Radar

New Directive Hikes Service Fees for Foreign Investors in Free Trade Zones

The Ethiopian Investment Board has issued a new directive revising the service fees from foreign investors payable in dollars to the Ethiopian Investment Commission (EIC), introducing updated rates for both the One Stop Shop and designated Free Trade Zones. The revised directive came into effect this April following its publication on the websites of the Ministry of Justice and the EIC. Issued pursuant to Article 23 of the Special Economic Zone Proclamation, the directive outlines charges for...


Radar

City Tables 350B Br Budget Plan for Upcoming Fiscal Year

The City Administration has approved a resolution to submit a proposed budget of 350 billion Br for the 2025/26 fiscal year to the City Council for deliberation. According to the Administration's statement on its official social media page, the draft budget is designed with a central focus on poverty reduction, encompassing targeted subsidies for sustainable development, investment in large-scale job-creating projects, and enhanced service delivery to address the growing demands of the reside...


Radar

Ethiopia, UN Launch Joint Plan to Drive Development Through 2030

The Ethiopian government and the United Nations (UN) have signed a five-year development plan outlining national priorities from 2025 to 2030. Signed on June 20 at the Ministry of Finance, the United Nations Sustainable Development Cooperation Framework (UNSDCF) with implications that it aligns with Ethiopia's reform goals and the Sustainable Development Agenda. The plan is backed by a projected 6.5 billion dollars, though only 1.5 billion dollars is currently secured. It focuses on closing t...