Donor support for Ethiopia economic reforms reaches $9 billion

Ethiopia announced Friday that it had secured roughly $9 billion (8 billion euros) in outside financing for ambitious economic reforms which analysts say could underpin the country's delicate political transition.

The finance ministry said in a statement that development partners had pledged "well over" $3 billion for Ethiopia's "Home-Grown Economic Reform" agenda unveiled earlier this year.

The statement said that comes on top of previous commitments of $3 billion from the World Bank and $2.9 billion from the International Monetary Fund (IMF). Prime Minister Abiy Ahmed said on Twitter that he was "very pleased" with the pledges, adding that they would go toward "macroeconomic, structural and sectoral reforms".

Abiy, this year's Nobel Peace Prize laureate, clearly believes that breathing new life into Ethiopia's economy is crucial for his prospects in elections planned for next year.

Failure to address problems like unemployment and a weakening currency would risk aggravating tensions in a country already grappling with mounting ethnic unrest and other security challenges. Ethiopia is one of Africa's fastest-growing economies, but high GDP rates have been largely fuelled by state spending and officials now want to stimulate private-sector growth. Abiy unveiled the "Homegrown Economic Reform" agenda to donors in September, describing it as "our bridge to prosperity".

The plan is intended to address issues like high inflation, foreign exchange shortages and current account deficits.

At the time, officials said it would require roughly $10 billion in external financing, and Abiy appealed to donors to "join us on this path".

The IMF funding was announced this week. In a statement Wednesday, the lender said it had reached a "staff-level agreement" to provide $2.9 billion over three years to address challenges including "debt vulnerabilities".

The support now has to be approved by the IMF's executive board.

The finance ministry said Friday it expected to receive additional reform financing from United Nations agencies and the European Investment Bank.