If lengthy negotiations
with the World Bank and the International Monetary Fund are successful,
Ethiopia will get $10.5 billion in support over the next few years, Prime
Minister Abiy Ahmed announced on Thursday.
The most populous
nation in East Africa experienced severe inflation and persistent shortages of
foreign currency in December, making it the third government on the continent
to default on its debt in as many years.
Prior to this, sources
close to the situation told Reuters that Ethiopia was looking to borrow about
$3.5 billion from the IMF as part of a reform program, and a Western diplomat
claimed Ethiopia was also attempting to obtain $3.5 billion in World Bank
budget support as well as an additional $3.5 billion in savings through debt
restructuring.
Analysts say Ethiopia
may need to agree to devalue its birr currency, which trades about 50% weaker
than the official exchange rate on the black market, to secure IMF support.
"We have been
having a wide range of talks, negotiations and discussions with the IMF and
World Bank. Because we were a bit tough with them and they were also tough with
us, the (talks) took five years," Abiy told lawmakers.
"Now with the
support of some friendly countries, it seems like many of our ideas have been
accepted. If this succeeds and we are able to agree on the reforms, Ethiopia
will get $10.5 billion in the coming years," he said.
Abiy added that there
were some reforms the government was unwilling to undertake right away, without
elaborating.
"There are some
areas we think should be reformed now, and there are things we think should
stay as it is. If all these suggestions get accepted and we agree, there is an
opportunity ahead of us. This reform agenda will play a huge impact in
alleviating the debt burden," the prime minister said.
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