Ethiopia gets over $240m from IMF

  1. Posted on Tuesday 1 September 2009 - 11:00
    thejournalist
    Omer Redi Ahmed, AfricaNews reporter in Addis Ababa, Ethiopia
    The Executive Board of the IMF last week approved about $240.6 million to Ethiopia in a 14-month arrangement under its Exogenous Shocks Facility (ESF) to help the country cope with the effects of the global recession on its balance of payments.
    IMF
    The arrangement (115 percent of Ethiopia’s quota) was approved under the high access component of the ESF, a facility designed to provide policy support and financial assistance on concessional terms to eligible low-income countries facing temporary exogenous shocks.

    A disbursement of about $115.1 million will become available following the Board’s decision.More than 6 months back, IMF gave Ethiopia $50 million under the same package.

    “Ethiopia’s economy has been adversely affected by a series of shocks, first from surging commodity prices in 2008, and most recently from the global recession,” said Takatoshi Kato, Deputy Managing Director and Acting Chair of the Board.

    ”While the authorities have been successfully implementing a macroeconomic adjustment package since late 2008 to help lower inflation and build up forex reserves, the recession is now putting renewed pressure on the external position as export receipts and remittances weaken and inward direct investment slows.”

    In February, Ethiopia’s economy was in a situation which economists describe as "the perfect storm": the country was in a serious balance of payment crisis, with foreign exchange reserves at an all-time low; the liquidity crunch, serious both in the domestic lending and foreign exchange domains; and inflation reaching a historical high.

    The oil bill has been a drain on the balance of payments with Ethiopia usually procuring oil with a 45-day credit supply.

    During a press conference he gave on February 13, Ethiopia’s Prime Minister, Meles Zenawi, argued that his government has sufficiently responded to offset what ails the economy.

    "The domestic credit crunch has come solely as a result of our monetary policy measures," Meles said. "It is believed defeating inflation is a primary task."

    Ethiopia has faced a turbulent external economic environment in the past two years, stemming from sharp movements in import prices and then the global slowdown.

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