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 find an additional $3.5 billion in savings through debt restructuring.

According to analysts, in order to get IMF funding, Ethiopia could have to consent to weaken its birr currency, which is worth roughly 50% less on the underground market than the official exchange rate.

“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 stated.
Without going into further detail, Abiy continued, “There were some reforms the government was unwilling to undertake right away.”
“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 PM noted.