Thursday, July 18, 2024
NewsEthiopia’s debt treatment quest hangs on IMF staff-level agreement, IMF executive

Ethiopia’s debt treatment quest hangs on IMF staff-level agreement, IMF executive

Ethiopia’s pursuit of debt treatment through the Common Framework platform of the G20 countries hangs on the long-awaited staff-level agreement of the International Monetary Fund (IMF), Fund’s executive disclosed.

Abebe Aemro Selassie, IMF’s Director of the African Department, explained how the application for the Common Framework process works, saying “countries apply to the Common Framework at or when they have a staff-level agreement with the [IMF] staff.”

In a press briefing he had on Friday, October 13, 2023, in Marrakesh, Morocco, the question of Ethiopia’s status in the process of the Common Framework was raised, and he explained how the country needs to have the staff-level agreement in advance.

“We don’t have one yet. I think the government is still working on its reform program, and there is no staff-level agreement there. That is when I think the process goes in earnest,” he told a group of journalists.

Ethiopia requested a debt treatment in February 2021 under the Common Framework for Debt Treatment, which was endorsed by the G20 and the Paris Club. Ethiopia’s request is co-chaired by China and France. But progress stagnated due to various factors mainly related to the two years conflict in northern Ethiopia.

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Earlier this week, the IMF published its Regional Economic Outlook for Sub-Saharan Africa, titling it “light on the horizon?” Publication of the outlook came in line with the World Bank and IMF’s 2023 Annual Meetings, which is currently taking place in Marrakesh, Morocco.

Ethiopia’s Minister for Finance, Ahmed Shide, along with his advisors, and the Governor of the National Bank of Ethiopia, Mamo Mihretu, are attending the meeting.

IMF’s outlook forecasts the growth of Ethiopia’s gross domestic product (GDP) in 2024 at 6.2 percent, just a 0.1 percent increase from the existing year and a 0.2 percent decrease from 2022.

However, in her speech at the House of Representatives last Monday, October 9, 2023, President Sahle-Work Zewde forecast for the economy to grow by 7.9 percent for the Ethiopian year that just began.

On the issue of foreign exchange rate flexibility, the IMF’s report mentioned Ethiopia as an example while discussing inflationary pressures despite resistance and the reflection of inflationary prices on currencies in the informal market.

Furthermore, the IMF report stated how tensions and further violence in the political sphere “remain despite a peace deal” in Ethiopia.

Results from the IMF-World Bank Annual Meetings are yet to be revealed, but the officials headed to the meeting with the main goal of collecting financial support for the second Homegrown Economic Reform Agenda, as well as the Ethiopian Recovery and Reconstruction program.

A team of IMF staff led by Mr. Alvaro Piris was in Addis Ababa for over a week, beginning September 25 and ending October 3, 2023, to discuss with government officials request for the IMF’s support to the reform agenda being crafted.

The staff’s team leader from Ethiopia’s visit was quoted in a statement shared last Thursday, saying that Ethiopia took important steps “to bring down inflation and stabilize the economy, including significant fiscal and monetary tightening.”

“The mission made good progress in discussing how the IMF could support the authorities’ economic program. Discussion will continue in the coming weeks to reach an agreement on a set of reforms for the requested program,” the statement reads.

Nevertheless, Ethiopia’s quest for a speedy debt restructuring under the Common Framework platform seems to be pausing even though the country started the process over two years ago.

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