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.
