Phoenix Group Signs 80MW Power Deal in Ethiopia to Expand Bitcoin Mining Operations

Phoenix Group Signs 80MW Power Deal in Ethiopia to Expand Bitcoin Mining Operations Abu Dhabi-listed blockchain and cryptomining conglomerate Phoenix Group (PHX.AD) has secured an 80-megawatt (MW) power purchase agreement (PPA) with Ethiopian Electric Power (EEP) as part of its global strategy to diversify operations. This milestone marks the company’s entry into the African market, with energy supplies expected to commence in the second quarter, according to a statement released on Wednesday. The agreement will power Phoenix Group’s bitcoin mining expansion in Ethiopia. While the exact location of the facility and financial terms were not disclosed, the project is being implemented in partnership with Abu Dhabi-based cybersecurity firm Data7. “We are aggressively building out our mining capabilities,” said Munaf Ali, CEO of Phoenix Group. He emphasized that this additional energy capacity will drive further growth as the company works towards a dual listing on Nasdaq. In a separate statement to Reuters, the company revealed ongoing discussions with financial institutions and Nasdaq, though no specific timeline for the listing has been provided. Phoenix Group operates mining facilities in multiple countries, including the UAE, the U.S., and Canada. Its shareholders include International Holding Company (IHC.AD), the largest listed firm in Abu Dhabi, chaired by Sheikh Tahnoon bin Zayed Al Nahyan, the UAE’s national security adviser and brother of President Sheikh Mohammed bin Zayed. IHC’s diversified portfolio includes investments in agriculture, energy, and cryptomining. Beyond Ethiopia, Phoenix Group is exploring additional investment opportunities in Africa and assessing regions with robust energy potential. The company is also considering an expansion into South America, with Brazil highlighted as a potential market. This 80MW agreement underscores Phoenix Group’s commitment to leveraging global energy resources to enhance its bitcoin mining operations and establish a stronger foothold in new markets. 1 COMMENT Phoenix Group Signs 80MW Power Deal in Ethiopia to Expand Bitcoin Mining Operations - Ethio Diaspora Hub Service January 23, 2025 At 3:30 pm […] Click here to read more […] […] Click here to read more […] Comments are closed.

OVID Holding: Aspiring to Become Ethiopia’s Second Vessel Operator Under Ambitious Five-Year Plan

OVID Holding: Aspiring to Become Ethiopia’s Second Vessel Operator Under Ambitious Five-Year Plan OVID Holding, a rapidly expanding conglomerate, has announced its intention to become Ethiopia’s second vessel operator as part of an extensive five-year investment plan. This initiative, aimed at diversifying its business portfolio, complements a broader strategy encompassing mining, real estate, construction, agriculture, and logistics. Five-Year Investment Strategy The conglomerate’s USD 20 billion investment plan aligns with its Vision 2030 framework, which focuses on five pillars: social development, economic growth, technology and innovation, and strategic partnerships. During a launch event at the Gelan Gura housing site near Addis Ababa, CEO Yonas Tadesse highlighted the company’s multi-sector approach and plans to expand internationally by 30% within the next five years. “Our focus spans across agriculture, mining, tourism, public transport, logistics, and more,” Yonas said, emphasizing the conglomerate’s commitment to growth in diverse sectors. Maritime Ambitions A key component of the Vision 2030 strategy is the development of a logistics and marine division under OVID Trade House. Legal advisor Yonas Woldeyes confirmed that the company is working to establish a vessel operating firm, either independently or through partnerships. “Becoming the nation’s second vessel operator is a significant step for OVID Holding,” Woldeyes stated, noting that the logistics company has already been formed and is supported by a qualified foreign expert to spearhead operations. This expansion into the maritime sector reflects OVID’s goal of reducing dependency on imports and enhancing supply chain efficiency. If successful, the venture would position the conglomerate alongside the state-owned Ethiopian Shipping and Logistics. Real Estate and Construction Initiatives OVID Holding is also making substantial investments in real estate. The company plans to transition from directly building homes to overseeing contractors as a housing developer. Over the next five years, OVID Real Estate aims to develop 120,000 homes, with 90,000 situated in Gelan Gura. This project, spanning 400,000 square meters, is being executed under a public-private partnership (PPP) arrangement, with 30% of the homes allocated to the Addis Ababa City Administration. The real estate division’s broader objective is to secure a 40% share of the national market by 2030. To support these efforts, OVID is establishing a mortgage bank and a microfinance institution to facilitate homeownership. Infrastructure and Partnerships In addition to housing, OVID Holding is pursuing major infrastructure projects, including a road designed to connect the southern and northern regions of Africa. The company has also partnered with ten new construction firms to accelerate housing projects in Gelan Gura and other locations. To bolster its initiatives, the conglomerate plans to sign 25 memorandums of understanding with local and international collaborators over the next five years. Economic and Employment Goals OVID Holding’s five-year strategy is expected to create one million new jobs. The investment plan includes USD 15 billion for real estate and USD 5 billion for global and regional expansions. These developments are anticipated to contribute significantly to Ethiopia’s economic growth. As OVID Holding moves forward with its Vision 2030 strategy, the conglomerate is positioning itself as a major player in Ethiopia’s logistics and real estate sectors.

IMF Calls for More Increases in Ethiopia’s Electricity Tariffs Amid Economic Reforms

IMF Calls for More Increases in Ethiopia’s Electricity Tariffs Amid Economic Reforms Partners are calling for additional revisions to address currency rate fluctuations, despite the government’s recent implementation of a long-awaited electricity tariff adjustment in June 2024. On June 20, 2024, the Council of Ministers approved a new power rate adjustment during its 36th regular meeting, which came into effect on September 11, coinciding with the Ethiopian New Year. The adjustment is part of a four-year plan to increase revenue and cover rising infrastructure costs for Ethiopian Electric Power (EEP) and Ethiopian Electric Utility (EEU). The reform, delayed for two years, aims to address the escalating operating and infrastructure expenses of both entities. Under the new pricing structure, customers using up to 200 kWh of electricity receive subsidies from EEU, which manages retail power supply. However, electricity costs have surged by an average of 122%. This framework lays the foundation for the four-year tariff adjustment plan for 2025–2028, targeting cost recovery. The plan includes quarterly power rate increases averaging 10%, with higher initial hikes to help the energy sector recover its costs. Despite international support for the recent adjustment from partners such as the World Bank and the International Monetary Fund (IMF), additional changes are now being sought. The IMF has indicated that a revised electricity tariff schedule will be implemented by June 2025 to fully recover operational and debt service costs by 2028. Similarly, the World Bank has emphasized the need for regular tariff adjustments to reflect changes in inflation, exchange rates, and other economic factors. “The goal is to achieve cost recovery for debt servicing and operational expenses by 2028, enhancing the sector’s financial sustainability,” the World Bank stated. Experts point out that the recent tariff adjustment, approved in June 2024, did not account for changes in the exchange rate implemented as part of the government’s macroeconomic reform on July 29. Partners supporting the reform expect the government to revise electricity tariffs to reflect the new exchange rate. Sources familiar with the matter report that the initial tariff adjustment study was based on an exchange rate approximately 50% lower than the current rate. As a result, future tariff adjustments are expected to double current rates. The adjustment aligns with the broader goal of reducing reliance on government and international financing for electrification programs. EEP, which has struggled to meet its debt obligations despite significant funding from the Commercial Bank of Ethiopia (CBE), faces ongoing challenges in financing its projects. Analysts argue that further tariff revisions are necessary to address these issues and support the sector’s growth. Experts highlight that nearly three-quarters of investments in Ethiopia’s energy sector require foreign currency. To address financial sustainability, the Ministry of Finance ordered the replacement of EEP’s outstanding loans to CBE before the macroeconomic reform announcement. Additionally, the World Bank’s energy strategy supports grid, off-grid, and mini-grid electrification based on least-cost principles. EEP received new debt relief of 263 billion birr from CBE following the reform, in addition to liabilities transferred to the Liability and Asset Management Corporation. This measure is expected to enhance the company’s ability to secure foreign currency for debt repayment and project financing. EEP, one of Ethiopia’s largest enterprises, reported total assets of 907 billion birr as of July 2024. Demere Assefa, Finance Executive Officer at EEP, stated that the exchange rate reform allows the company to work with multiple banks, including the central bank, to settle foreign debts and implement projects using both local and foreign currencies. The four-year electricity tariff adjustment plan remains a cornerstone of the government’s efforts to strengthen Ethiopia’s energy sector and achieve financial sustainability by 2028.

Ethiopia’s Coffee Exports Hit $988 Million in Six Months, Powered by Nekmet’s Global Surge

Ethiopia’s Coffee Exports Hit $988 Million in Six Months, Powered by Nekmet’s Global Surge Key Takeaways Ethiopia exports 240,260 tons of coffee in six months, hitting 153% of planned volume Revenue totals $988 million, surpassing a $714 million target by 127% Nekmet, along with Sidama, Jimma, Yirgacheffe, and Limu, accounts for 90% of foreign coffee sales Germany, Belgium, and Saudi Arabia stand out as top buyers Ethiopia’s Coffee Boom Ethiopia’s coffee industry is enjoying a remarkable run, posting robust gains in both export volume and earnings over the past six months. According to the Ethiopian Coffee and Tea Authority, the country shipped 240,260 tons of coffee—far outpacing the official target of 133,063 tons—and generated $988 million in revenue, well above the $714 million forecast for the period. “We’re seeing the impact of operational improvements and strong global demand,”says Shafi Umer, Deputy Director-General of the Ethiopian Coffee and Tea Authority.“Coffee continues to be the backbone of Ethiopia’s export strategy.” Nekmet’s Rising Star One of the biggest drivers of this exceptional performance has been Nekmet coffee, a fast-emerging brand that is increasingly dominating Ethiopia’s coffee landscape. Alongside established varieties like Sidama, Jimma, Yirgacheffe, and Limu, Nekmet now accounts for 90% of total coffee exports. Industry insiders point to Nekmet’s distinctive flavor profile and consistent quality as key factors behind its surge in global markets. Global Demand & Premium Pricing Top Buyers: Germany, Belgium, and Saudi Arabia remain Ethiopia’s largest importers of coffee, a reflection of strong European demand for specialty beans and the Middle East’s growing coffee culture. Premium Beans: Ethiopian coffee is often priced higher than blends from other regions, thanks to its reputation for complex flavors, high-altitude growth conditions, and a centuries-old heritage. Logistical Improvements: Investments in road networks, cold-storage facilities, and digitized customs procedures have cut delivery times and lowered operational costs, helping exporters fulfill orders efficiently. Focus on Quality and Sustainability Government agencies and industry bodies have ramped up training programs aimed at improving bean quality, post-harvest handling, and traceability. Many Ethiopian coffee farmers are adopting sustainable farming practices—such as shade-grown cultivation and eco-friendly processing methods—to meet stringent international standards and capture premium prices. Challenges and Outlook While surging export revenue benefits growers and traders, Ethiopia’s decision to float its currency has driven up costs for imports like fertilizers and machinery. Nonetheless, officials believe strong coffee earnings will help cushion these headwinds. Looking ahead, the Ethiopian Coffee and Tea Authority aims to sustain momentum by expanding farmland under improved irrigation systems, boosting productivity through better seedlings, and launching aggressive marketing campaigns abroad. If the current pace continues, authorities anticipate full-year coffee export earnings could easily surpass the $2 billion mark, positioning Ethiopia as not just the largest coffee producer in Africa, but also a key player on the global stage for specialty beans. 1 COMMENT Ethiopia’s Coffee Exports Hit $988 Million in Six Months, Powered by Nekmet’s Global Surge - Ethio Diaspora Hub Service January 21, 2025 At 1:19 pm […] Click here to read more […] […] Click here to read more […] Comments are closed.

Ethiopian Airlines Honors Visionary Leaders Behind Its Success

Ethiopian Airlines Honors Visionary Leaders Behind Its Success Ethiopian Airlines, Africa’s largest and most successful airline, hosted a grand recognition and award ceremony to honor the distinguished former leaders who have significantly contributed to shaping its legacy. These leaders, who served as General Managers and CEOs, were instrumental in transforming Ethiopian Airlines into a globally recognized carrier. The honorees included Colonel Semret Medhane, Captain Zeleke Demessie,Dr Ahmed’s Kellow, Mr. Girma Wake, Mr. Bisrat Nigatu, and Mr. Tewolde Gebremariam. Each was celebrated for their visionary leadership and the invaluable contributions they made during their tenure. The Honorees and Their Legacy Colonel Semret MedhaneAs one of the earliest leaders of Ethiopian Airlines, Colonel Semret Medhane laid the foundation for the airline’s success. His tenure was marked by a strong focus on operational efficiency and professionalism, which set the tone for Ethiopian Airlines to grow into a trusted brand. His pioneering leadership came at a time when Ethiopia was emerging in the global aviation scene. Captain Zeleke DemessieA distinguished aviator and leader, Captain Zeleke Demessie brought extensive flying experience and technical expertise to Ethiopian Airlines. He is remembered for strengthening the airline’s flight operations and safety standards, which remain among the best in the industry. Dr Ahmed’s KellowA visionary leader, Dr. Ahmed Kellow played a pivotal role in modernizing Ethiopian Airlines and expanding its reach. Under his guidance, the airline adopted innovative technologies and operational strategies, allowing it to compete with global carriers. Mr. Girma WakeWidely regarded as one of the most influential figures in the airline’s history, Mr. Girma Wake served as CEO from 2004 to 2011. His tenure was marked by significant expansion, including new routes, increased fleet size, and record-breaking profitability. He was instrumental in strengthening Ethiopian Airlines’ position as a major player in the African and global aviation markets. Mr. Bisrat NigatuKnown for his strategic insights, Mr. Bisrat Nigatu contributed to the airline’s sustained growth and financial stability. His leadership was characterized by a commitment to workforce development and a focus on enhancing customer service, ensuring Ethiopian Airlines retained its competitive edge. Mr. Tewolde GebremariamMr. Tewolde Gebremariam, who served as CEO from 2011 to 2022, is celebrated for taking Ethiopian Airlines to unprecedented heights. Under his leadership, the airline became Africa’s largest carrier, with an extensive global network and a modern fleet. Tewolde’s focus on digital transformation, sustainability, and operational excellence solidified Ethiopian Airlines’ reputation as a world-class airline. Celebrating 78 Years of Excellence For nearly 78 years, Ethiopian Airlines has been a cornerstone of national and continental pride, delivering exceptional performance and unmatched service. This enduring legacy of excellence has been sustained through the dedication and resilience of its leaders and employees across generations. Ethiopian Airlines has consistently maintained its position as a leader in the aviation industry, with a vast network spanning five continents and a commitment to innovation, sustainability, and customer satisfaction. The airline’s success is not only a testament to its strategic vision but also a reflection of Ethiopia’s determination to achieve global recognition in aviation. The recognition of these outstanding leaders serves as a reminder of Ethiopian Airlines’ remarkable journey and the individuals who made it possible. With a firm foundation built on their efforts, Ethiopian Airlines continues to thrive, charting new paths in aviation and inspiring pride across Africa and the world. 1 COMMENT Hon Kes Yaqob January 20, 2025 At 9:24 am Why do Ethiopian Airlines never ever gives credit to the founder of Ethiopian Airlines, Emperor Haile Selassie I, this is truly a slap in the face of the Emperor they are a disgraceful bunch because without His Majesty’s personal money buying the first plane there would be no Ethiopian Airlines. Why do Ethiopian Airlines never ever gives credit to the founder of Ethiopian Airlines, Emperor Haile Selassie I, this is truly a slap in the face of the Emperor they are a disgraceful bunch because without His Majesty’s personal money buying the first plane there would be no Ethiopian Airlines. Comments are closed.

How to Calculate Property Tax in Ethiopia

How to Calculate Property Tax in Ethiopia The Ethiopian government’s new property tax law has sparked widespread debate, with opposition parties and members of the business community firmly condemning the move. This article explores the key provisions of the tax, its intended use, and the concerns it has raised. Overview of the Property Tax Bill On January 14, 2025, the Ethiopian House of People’s Representatives passed property tax bill aimed at generating revenue for urban development and addressing wealth distribution. The bill passed with four votes against and ten abstentions, despite strong opposition. The proclamation empowers regional governments to collect property taxes through local administrations. It is part of the government’s broader economic reform program to increase domestic revenue and reduce dependency on federal funding. Who Pays and How Much? The property tax is calculated based on the annual change in the value of a property, with rates ranging from: 0.1% to 1% for houses 0.2% to 1% for land Additionally, the taxable value of a property is set at 25% of its market value. This means only a quarter of the property’s market value is used as the base for calculating the annual tax. For example: A house with a market value of 20 million birr: Taxable value = 25% of 20 million = 5 million birr Annual tax at 0.1% = 5,000 birr Taxable value = 25% of 20 million = 5 million birr Annual tax at 0.1% = 5,000 birr A house with a market value of 10 million birr: Taxable value = 25% of 10 million = 2.5 million birr Annual tax at 0.1% = 2,500 birr Taxable value = 25% of 10 million = 2.5 million birr Annual tax at 0.1% = 2,500 birr A house with a market value of 5 million birr: Taxable value = 25% of 5 million = 1.25 million birr Annual tax at 0.1% = 1,250 birr Taxable value = 25% of 5 million = 1.25 million birr Annual tax at 0.1% = 1,250 birr A house with a market value of 1 million birr: Taxable value = 25% of 1 million = 250,000 birr Annual tax at 0.1% = 250 birr Taxable value = 25% of 1 million = 250,000 birr Annual tax at 0.1% = 250 birr Payments can be made in one or two installments. The Ministry of Finance retains the authority to adjust tax rates and taxable percentages based on further studies. Exemptions Certain properties are exempt from the tax, including: Government-owned properties and buildings used for social services. Religious institutions used for worship or burial purposes. Residential buildings providing services to low-income families. However, the definition of “low income” remains contentious, with critics arguing that cost-of-living variations across regions make it difficult to establish a universal standard. Opposition and Criticism The bill has been met with strong opposition. Ato Desalegn Chane, a member of the Amhara National Movement (ABN), argued that “government employees and small businessmen” should not be burdened with property taxes. He criticized the lack of fairness, questioning whether it is justifiable to introduce this tax when the government is already close to covering its expenses with existing revenue. ABN member Abebaw Desaleg expressed concerns that the revenue from the property tax might be diverted to controversial projects, such as the corridor development initiative championed by Prime Minister Abiy Ahmed, instead of addressing urgent community needs like roads, schools, and health centers. “Corridor development is not expected to improve the lives of the community quickly,” Abebaw said, warning that infrastructure projects directly benefiting the public could be neglected. Government’s Defense Ato Desalegn Wedaje, chairman of the Planning, Budget, and Finance Standing Committee, defended the bill, emphasizing that the revenue would primarily be used for local infrastructure development. “The community will discuss the tax for 60 days before implementation,” he explained. “After these discussions, the funds will be allocated to infrastructure, services, and other urban development needs.” He dismissed concerns that the tax would significantly raise the cost of living, clarifying that it targets “created wealth” and applies only to those who own property. He assured the council that low-income individuals, including the elderly, would not be forced to sell their homes to pay the tax. However, property owners unable to pay will be required to settle two years of property tax when selling or transferring ownership of their properties. Ethiopia’s new property tax law is a key component of the government’s strategy to boost domestic revenue and reduce federal financial burdens. While it promises to fund critical urban development projects, critics argue that it may disproportionately affect low-income citizens and could divert funds to less urgent initiatives. As the government prepares to implement the tax, balancing revenue generation with fairness and public acceptance will be crucial. The next 60 days of public discussions will determine how effectively this balance is achieved. 2 COMMENTS Ezkias Biru January 19, 2025 At 8:48 pm I am not a tax asseser, or neither a finance professional, but I know that in developing countries, there are a few priorities. One, we have to fulfill the basic necessities for the people like infrastructure in health, roads, and poverty alleviation programs. Two, we have to have a statistical data what % of the people are owning properties? Third, we need peace and stability to increase the growth of the economy. Therfore, increasing tax at this time is not visible. I am not a tax asseser, or neither a finance professional, but I know that in developing countries, there are a few priorities. One, we have to fulfill the basic necessities for the people like infrastructure in health, roads, and poverty alleviation programs. Two, we have to have a statistical data what % of the people are owning properties? Third, we need peace and stability to increase the growth of the economy. Therfore, increasing tax at this time is not visible. h January 22, 2025 At 8:52 pm it is good but why do you take only the list %? what if the Gov’t charges you the 1%? it is good but why do you take only the list %? what if the Gov’t charges you the 1%? Comments are closed.

IMF Completes Second ECF Review for Ethiopia, Approves US$248 Million Disbursement

IMF Completes Second ECF Review for Ethiopia, Approves US$248 Million Disbursement The International Monetary Fund (IMF) Executive Board has completed the second review under the Extended Credit Facility (ECF) arrangement for Ethiopia, enabling the immediate disbursement of approximately US$248 million (SDR 191.7 million). This brings total disbursements under the program to about US$1.611 billion since its approval in July 2024. The four-year ECF arrangement supports Ethiopia’s Homegrown Economic Reform Agenda (HGER) aimed at addressing macroeconomic imbalances and fostering private sector–led growth. At the time of approval, the total arrangement stood at SDR 2.556 billion (850 percent of quota), or roughly US$3.4 billion, within a broader US$10.7 billion support package from various development partners and creditors. In its review, the IMF noted that all quantitative performance criteria were met. However, the government’s contribution to targeted social safety nets fell short of the intended target, largely due to preparatory work needed to expand these programs. Additionally, the structural benchmark regarding audited accounts of the National Bank of Ethiopia (NBE) has been reset from end-January 2025 to end-March 2025 to allow for completion. Progress on Key Reforms Foreign Exchange Market: The authorities have implemented significant policy actions to enhance market efficiency and narrow the parallel market premium to single digits. Restricting the NBE’s foreign exchange interventions and moving toward a more flexible exchange rate regime are helping improve transparency and stability. Monetary Policy: Tight monetary and financial conditions have been maintained to tackle inflationary pressures and reduce macroeconomic imbalances. Reaching a positive real interest rate is a key goal to anchor inflation expectations and support credibility in the new monetary policy framework. Fiscal Policy: A supplementary budget approved in late November 2024 remains consistent with program targets. Ongoing efforts to expand the Productive Safety Net Program (PSNP) will protect vulnerable households, while measures like fuel price adjustments and VAT/excise tax reforms aim to bolster domestic revenue, thereby creating room for social and development spending. Financial Sector Stability: Modernizing bank regulations, strengthening supervision, and closely monitoring non-performing loans are central to safeguarding financial stability. The authorities plan to remove the credit growth cap and adjust policy rates in a carefully sequenced manner to maintain orderly market conditions. Debt Sustainability: Ethiopia is pursuing a debt treatment under the G20 Common Framework, and negotiations have progressed with the Official Creditor Committee. Additional discussions with Eurobond holders and other external commercial creditors are underway to secure comparability of treatment. The IMF welcomes these efforts as critical steps toward restoring debt sustainability. IMF Statement Following the Executive Board’s discussion, Mr. Nigel Clarke, Deputy Managing Director and Acting Chair of the Board, underscored Ethiopia’s robust reform momentum and commitment: “The authorities continue to make strong progress in implementing their Fund-supported program and addressing macroeconomic imbalances. The transition to a flexible exchange rate has advanced further, supported by macroeconomic and foreign exchange market policy measures, and the parallel market premium has stabilized in single digits with rising FX supply.” Mr. Clarke emphasized maintaining prudent macroeconomic policies, such as tight monetary policy and avoiding monetary financing of government deficits, to sustain stability. He also highlighted the importance of broadening social safety nets, advancing revenue mobilization efforts, and making further progress on debt restructuring to secure a firm foundation for Ethiopia’s economic future. With the second review successfully completed, the IMF and Ethiopian authorities are focused on the continued implementation of the Homegrown Economic Reform Agenda. Key next steps include advancing debt restructuring discussions, solidifying monetary policy credibility, and ensuring broader social support for vulnerable communities.

IMF Completes Second ECF Review for Ethiopia, Approves US$248 Million DisbursementJanuary 17, 2025 | Washington, D.C.

IMF Completes Second ECF Review for Ethiopia, Approves US$248 Million DisbursementJanuary 17, 2025 | Washington, D.C. The International Monetary Fund (IMF) Executive Board has completed the second review under the Extended Credit Facility (ECF) arrangement for Ethiopia, enabling the immediate disbursement of approximately US$248 million (SDR 191.7 million). This brings total disbursements under the program to about US$1.611 billion since its approval in July 2024. The four-year ECF arrangement supports Ethiopia’s Homegrown Economic Reform Agenda (HGER) aimed at addressing macroeconomic imbalances and fostering private sector–led growth. At the time of approval, the total arrangement stood at SDR 2.556 billion (850 percent of quota), or roughly US$3.4 billion, within a broader US$10.7 billion support package from various development partners and creditors. In its review, the IMF noted that all quantitative performance criteria were met. However, the government’s contribution to targeted social safety nets fell short of the intended target, largely due to preparatory work needed to expand these programs. Additionally, the structural benchmark regarding audited accounts of the National Bank of Ethiopia (NBE) has been reset from end-January 2025 to end-March 2025 to allow for completion. Progress on Key Reforms Foreign Exchange Market: The authorities have implemented significant policy actions to enhance market efficiency and narrow the parallel market premium to single digits. Restricting the NBE’s foreign exchange interventions and moving toward a more flexible exchange rate regime are helping improve transparency and stability. Monetary Policy: Tight monetary and financial conditions have been maintained to tackle inflationary pressures and reduce macroeconomic imbalances. Reaching a positive real interest rate is a key goal to anchor inflation expectations and support credibility in the new monetary policy framework. Fiscal Policy: A supplementary budget approved in late November 2024 remains consistent with program targets. Ongoing efforts to expand the Productive Safety Net Program (PSNP) will protect vulnerable households, while measures like fuel price adjustments and VAT/excise tax reforms aim to bolster domestic revenue, thereby creating room for social and development spending. Financial Sector Stability: Modernizing bank regulations, strengthening supervision, and closely monitoring non-performing loans are central to safeguarding financial stability. The authorities plan to remove the credit growth cap and adjust policy rates in a carefully sequenced manner to maintain orderly market conditions. Debt Sustainability: Ethiopia is pursuing a debt treatment under the G20 Common Framework, and negotiations have progressed with the Official Creditor Committee. Additional discussions with Eurobond holders and other external commercial creditors are underway to secure comparability of treatment. The IMF welcomes these efforts as critical steps toward restoring debt sustainability. IMF Statement Following the Executive Board’s discussion, Mr. Nigel Clarke, Deputy Managing Director and Acting Chair of the Board, underscored Ethiopia’s robust reform momentum and commitment: “The authorities continue to make strong progress in implementing their Fund-supported program and addressing macroeconomic imbalances. The transition to a flexible exchange rate has advanced further, supported by macroeconomic and foreign exchange market policy measures, and the parallel market premium has stabilized in single digits with rising FX supply.” Mr. Clarke emphasized maintaining prudent macroeconomic policies, such as tight monetary policy and avoiding monetary financing of government deficits, to sustain stability. He also highlighted the importance of broadening social safety nets, advancing revenue mobilization efforts, and making further progress on debt restructuring to secure a firm foundation for Ethiopia’s economic future. Looking Ahead With the second review successfully completed, the IMF and Ethiopian authorities are focused on the continued implementation of the Homegrown Economic Reform Agenda. Key next steps include advancing debt restructuring discussions, solidifying monetary policy credibility, and ensuring broader social support for vulnerable communities. The completion of this review by the IMF Executive Board reaffirms the Fund’s support for Ethiopia’s ongoing reforms and acknowledges the strong commitment of Ethiopian authorities to address longstanding macroeconomic challenges and build a resilient, inclusive economy.

IMF to Decide on Ethiopia’s $3.4 Billion Program, Unlocking $250 Million Boost

IMF to Decide on Ethiopia’s $3.4 Billion Program, Unlocking $250 Million Boost Addis Ababa – The International Monetary Fund (IMF) Executive Board is set to meet on Friday, January 17, 2025, to evaluate Ethiopia’s progress under its $3.4 billion Extended Credit Facility (ECF) program. If approved, the second review could unlock over $250 million in funding, providing a significant boost to Ethiopia’s ongoing economic reform efforts. This review follows a staff-level agreement reached on November 27, 2024, after an IMF mission visited Addis Ababa from November 12 to 26 to assess the country’s progress. The IMF noted that Ethiopia had made substantial advancements in implementing its “homegrown economic reform program.” This includes transitioning to a market-determined exchange rate and addressing structural issues that have long hindered the nation’s economic growth. While the agreement does not explicitly reference an understanding between the Ethiopian government and its official creditors on debt restructuring, the IMF highlighted that “key milestones have been achieved under the Common Framework process.” According to an anonymous source cited by Bloomberg, significant progress on debt reworking has yet to be officially finalized. However, the IMF staff determined there was enough progress to recommend the Executive Board approve the second review. Debt Restructuring Under the G20 Common Framework Ethiopia is restructuring its $12.4 billion external debt under the Group of 20’s Common Framework, an initiative designed to provide comprehensive debt solutions for countries facing economic challenges. The creditor committee overseeing Ethiopia’s restructuring efforts is co-chaired by China and France and includes other creditor nations such as Israel, Japan, and India. The resolution of Ethiopia’s debt challenges is considered critical to restoring the country’s fiscal sustainability and securing future growth. Reform Milestones and Economic Progress Ethiopia’s economic reform program, launched in July 2024, has introduced sweeping changes to modernize the country’s economic framework. A key component of these reforms is the shift from a crawling peg exchange rate system to a market-based currency regime. This change has already yielded results, with foreign exchange shortages easing and the gap between official and parallel market exchange rates narrowing to less than 10%, according to the IMF. These reforms have also unlocked additional external financing. Central Bank Governor Mamo Mihretu announced in an online statement that Ethiopia is expected to secure $10.7 billion in external financing from the IMF, World Bank, and other creditors as part of the reform agenda. This financial inflow is essential for sustaining Ethiopia’s efforts to stabilize its economy and invest in key sectors. Previous Milestones and First Review This latest development follows the successful completion of the first review of Ethiopia’s four-year ECF program. On October 18, 2024, the IMF Executive Board approved the first review, allowing the disbursement of $340.7 million. The program’s overall goal is to support Ethiopia’s macroeconomic stability, advance structural reforms, and promote inclusive growth. Broader Implications The IMF’s $3.4 billion loan program represents a critical element of Ethiopia’s broader reform agenda, which aims to address longstanding economic challenges, including high inflation, limited foreign exchange reserves, and external debt burdens. Successful implementation of these reforms could strengthen Ethiopia’s economic resilience, attract foreign investment, and lay the groundwork for sustained growth. As Ethiopia works to rebuild its economy amid regional and global challenges, the upcoming IMF Executive Board decision will be a crucial step in determining whether the country stays on track to achieve its ambitious reform goals. Approval of the review would not only release $250 million in funding but also signal confidence in Ethiopia’s reform trajectory, potentially encouraging further support from international partners.