Ethiopia is forging ahead with its ambitious home-grown economic reform agenda, a strategy designed to boost the nation’s overall economic growth and development. This initiative emphasizes domestic solutions and local ownership while also recognizing the importance of collaboration with international partners. A recent high-level visit underscores this collaborative approach.
Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), concluded a two-day visit to Ethiopia this week, signaling the continued close cooperation between the nation and the global financial institution. The visit provided an opportunity for discussions on Ethiopia’s economic progress, challenges, and future direction within the framework of its home-grown economic model.
The home-grown economic agenda, championed by the Ethiopian government, aims to address key structural issues and unlock the country’s economic potential through targeted reforms and investments. This includes a focus on boosting productivity, creating jobs, and improving the business environment.
The Ethiopian government has consistently emphasized its commitment to working closely with international financial institutions like the IMF to ensure the success of its economic reforms. This partnership is seen as crucial for accessing technical expertise, financial assistance, and best practices while ensuring that the home-grown agenda aligns with international standards and promotes macroeconomic stability.
In an exclusive interview with The Ethiopian Herald, the Managing Director said that the Ethiopian government is undertaking promising economic policy reforms aimed at boosting exports, restoring debt sustainability, and lowering inflation.
She has also reiterated that the country is on the right track in empowering entrepreneurship, upholding private sectors, creating decent jobs and improving incomes of its citizens through the reform, emphasizing the nation’s substantial progress on debt restructuring negotiations along with the common framework.
“About half of the financing has already been disbursed since July out of a larger 10.7 billion USD support package, including financing from the World Bank and debt relief from foreign creditors,” she stated.
She said, adding that during the second review of the program, the IMF has witnessed the government’s firm dedications in the financial sector, hailing the continued efforts of the leadership with its guided reforms aligning with IMF policies on assessing financing assurances and data provision during the program reviews.
Furthermore, she pointed out that the government has taken a decisive measure to adopt a more flexible exchange rate which alleviates major hurdles to investment, exports and forex crunches, witnessing a significant reduction in the premium in the parallel exchange market and foreign exchange has become more readily available.
“The Home Grown Economic Reforms program is properly focused on ensuring macroeconomic stability and developing the private sector to provide a solid foundation for creating jobs and future prosperity,” she noted.
Expressing commitments ahead, the managing director emphasized the need to uphold the flexible exchange rate regime, resource mobilization for socioeconomic development and moving to market-led financing as key reform priorities.
Moreover, she remarked that providing better financial returns will also encourage savings, and expand the resources available for both government and private sector investments.
“Social spending is essential to promote inclusive growth and protect the most vulnerable. Also, meticulous policy reform would help balance efforts to ensure fiscal sustainability while protecting social spending, emphasizing the need to fortify social spending in its reform program,” Georgieva said.
Prime Minister Abiy Ahmed (PhD) highlighted the role of the International Monetary Fund (IMF) in supporting Ethiopia’s ambitious economic reforms, underscoring the importance of its ongoing technical and financial assistance.
“We deeply value the IMF’s continued support for our economic reform program and are grateful for your direct engagement,” Prime Minister Abiy shared on his social media platforms.
He further emphasized that Ethiopia’s reform program, supported by one of the IMF’s largest financing packages, is driven by a home-grown vision and aligns with the country’s broader development goals. “We take full ownership of these reforms, enabling us to implement bold and historic measures that address long-standing economic challenges,” the Prime Minister stated.
The Prime Minister also shared optimistic views on the positive outcomes of the reform program thus far, noting that these efforts will help ensure macroeconomic stability, stimulate growth, enhance living standards, and position Ethiopia as a model of prosperity in Africa.
During her two-day visit, Georgieva participated in high-level discussions with Finance Minister Ahmed Shide and other senior government officials, reinforcing the strong collaboration between Ethiopia and the IMF in advancing the country’s economic objectives.
The Georgieva visit shows the countries commitment in working with the institution closely. Also it is known the importance of continued dialogue and collaboration between Ethiopia and the international community in navigating the complexities of economic development.
The home-grown economic agenda represents a significant shift in Ethiopia’s approach to development, placing greater emphasis on domestic resources and local ownership. While the path ahead may present challenges, the government remains confident that this strategy, coupled with strong international partnerships, will pave the way for a more prosperous future for Ethiopia.
As Ethiopia continues its ambitious pursuit of economic development, its relationship with international financial institutions (IFIs) like the World Bank and IMF has become increasingly crucial, yet complex. This partnership has yielded both progress and challenges, reflecting the delicate balance between national priorities and the conditions set by global financial bodies.
It is known that the World Bank has been a significant partner in financing infrastructure projects, such as roads, energy, and transportation, which are vital for Ethiopia’s economic transformation. The IMF has provided support through various programs focused on macroeconomic stability, fiscal reforms, and capacity building.
While the collaboration with IFIs has been largely beneficial, there are on-going discussions regarding the conditions attached to loans and assistance. Concerns have been raised about the potential impact of these conditions on Ethiopia’s policy space and its ability to pursue its development path.
The future of Ethiopia’s relationship with IFIs will likely involve a continued focus on balancing development goals with economic realities. As Ethiopia progresses, it will be essential to ensure that the partnership with IFIs remains aligned with the country’s long-term vision and priorities.
BY EYUEL KIFLU
THE ETHIOPIAN HERALD TUESDAY 11 FEBRUARY
