Ethiopia aims to get $3.5 billion under IMF programme-sources
(Reuters) – Ethiopia is in talks with the International Monetary Fund (IMF) to borrow around $3.5 billion under a reform programme, three sources familiar with the matter told Reuters. A group of Ethiopia officials and their advisors told international bondholders in a call last Thursday that the country aims to reach a staff level agreement on an IMF loan by the first quarter of 2024, said one of the sources, who asked not to be named because talks are private.
Ethiopia has been requesting “exceptional access” to IMF funding of more than 100% of its allowance since 2022, but so far hasn’t disclosed how much exactly. In April, sources told Reuters the country was in talks to borrow at least $2 billion from the Fund.
It is not clear if the total funding that the east African nation is seeking from the IMF includes financing under the Resilience and Sustainability Trust (RST), a vehicle to help low-income and vulnerable middle-income countries build resilience to external shocks and ensure sustainable growth.
A spokesperson for Ethiopia’s finance ministry and their advisors Lazard did not immediately reply to a request for comment.
“Macroeconomic forecasts and external financing needs are still under discussion, including the financial support the IMF and other development partners could provide,” an IMF spokesperson said in reference to the amount of funding under discussion.
According to the presentation to investors seen by Reuters, the IMF figure is indicative and still under discussion. The country also aims to get $3.5 billion from the World Bank for budget support under the Development Policy Operation (DPO).
The government calculated a financing gap of around $11.5 billion until the 2027/2028 fiscal period while foreign reserves are currently at 0.2 months of import cover, the sources said.
Ethiopia’s agreement with its bilateral creditors, other than China, to
suspend debt payments
until 2025 could be voided if the country does not secure an International Monetary Fund (IMF) loan by March 31, 2024, the Paris Club of developed creditor nations said earlier this month.
The presentation to investors also showed that a recent agreement on debt relief for Ethiopia with Chinese lenders had seen Export Import Bank of China (China EXIM) suspend payments for two years at 3% interest, and China Development Bank suspend payments until end-2026 with 6% interest, several sources said.
Africa’s second-most populous country requested a debt restructuring under the Group of 20’s Common Framework process in early 2021, but progress has been complicated by a civil war that broke out in November 2020 and has delayed progress with creditors on a debt workout.
Credit ratings agency S&P Global Ratings downgraded Ethiopia to
“Default” on Friday after the east African country failed to make an interest payment due on Dec. 11 on its $1 billion bond maturing in December 2024.
Reporting by Karin Strohecker and Jorgelina do Rosario, additional reporting by Rodrigo Campos, Rachel Savage and Dawit Endeshaw, editing by Chizu Nomiyama)