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 Republic of Ethiopia

International Monetary Fund

No 2025/027, IMF Staff Country Reports from International Monetary Fund

Abstract: This paper presents Ethiopia’s Second Review under the Extended Credit Facility (ECF) Arrangement and Financing Assurances Review. The Ethiopian authorities have demonstrated strong commitment to achieving the objectives of the Fund-supported program. Implementation of ECF-supported reforms is advancing well. Reaching a positive real monetary policy rate is a key step to build the credibility of the new monetary policy framework and change market expectations for inflation and the exchange rate. Continued implementation of financial sector reforms, including modernizing the bank regulation framework, strengthening bank supervision, and monitoring nonperforming loans, will support financial sector stability. While tightening policies and adjustment will constrain economic activity in the near term, policy reforms are expected to support higher growth and continued easing of inflation over the medium term. Key downside risks include persistent inflation or depreciation expectations, security risks or social unrest, policy slippages and commodity price volatility.

Keywords: debt treatment option; inflation outturn; OCC members' feedback; debut listing; staff appraisal; Debt sustainability analysis; Debt service; Debt sustainability; Global; Southern Africa (search for similar items in EconPapers)
Pages: 125
Date: 2025-01-29
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