The IMF, the World Bank back Ethiopia’s Development efforts
The IMF and the World Bank recently approved loans and disbursements for the FDRE Government after a thorough assessment of successful implementation of development policies. Two Loan Agreements amounting to 130 million dollars (1.8 billion birr) were signed between the Federal Democratic Republic of Ethiopia and the World Bank on April 30, 2010. The first Additional Financing Agreement amounting to 80 million US dollars (1.1 billion birr) will be utilized to address the financial gap in the implementation of Water Supply and Sanitation Project, i.e. for the construction of water supply facilities in 50 towns originally targeted by the project. The second agreement which covers 50 million US dollars (672.21 million birr) will be used to finance the implementation of the Public Sector Capacity Building Programme (PSCAP) that includes the improvement of the scale, efficiency and responsiveness of public service delivery at the federal, regional and local levels; for empowering citizens to participate more effectively in shaping their own development and also for promoting good governance and accountability.
Once again, on 3rd June 2010, an additional Financing Loan agreement that amounts to 100 million dollars (approximately 1362.21 million birr) was signed between the Federal Democratic Republic of Ethiopia and the World Bank.
Also recently, the Executive Board of the International Monetary Fund (IMF) approved the first review of Ethiopia's economic performance under the 14-month arrangement of the high access component of the Exogenous Shocks Facility (ESF). The approval will enable Ethiopia as a country to draw SDR 40.11 million (about US$58.7 million), bringing the total disbursements under the arrangement to SDR 113.65 million (about US$166.2 million). According to the IMF Executive Board, Ethiopia has been successfully implementing policies to reduce inflation and rebuild external reserves as agreed in the ESF-supported programmes. Since the end of 2009, consumer price inflation had declined sharply to a single digit. Overall the negative impact of the global recession has not been as severe as expected. All of the quantitative performance criteria and indicative targets for end-December 2009 were met. The structural measures covered by the Fund-supported programme were also implemented. It is noted that, the ESF arrangement for Ethiopia was approved by the Executive Board on 26th August 2009, to help Ethiopia deal with the effects of the global recession on its balance of payments.
In a related development, Ken Ohashi, the WB’s Country Representative to Ethiopia, stated in a letter to the New York Times Review of Books that the aim of any development assistance was to promote national development for a country and the reduction of poverty for its people. In this regard, he further stated, Ethiopia had an impressive performance, with economic growth accelerating sharply on a sustained basis since about 2003, despite the global economic crisis. Since 2000, Mr Ohashi added, Ethiopia had recorded the second-fastest improvement in human development in the world, according to the UNDP Human Development Report 2009. This measure related to more Ethiopians living a longer and healthier life, being better educated, and having a decent quality of life.
With regard to the globally agreed Millennium Development Goals, Ethiopia, according to Mr. Ohashi, was making significant progress in all areas. The country was on track to meet goals relating to extreme poverty and hunger, universal primary education, combating HIV/AIDS, malaria, and other diseases, and developing a global partnership for development. Good progress is also being made in reducing child mortality and ensuring environmental sustainability. Despite having already achieved gender parity in primary schools, Ethiopia is likely to fall short, as of 2015, on the targeted improvements for promoting gender equality and empowering women and improving maternal health.
He further stated that these achievements in national growth and poverty reduction were important measures by which donors assess the effectiveness of their support to Ethiopia. They show that donor funding to the country and peoples of Ethiopia have yielded substantial results that have had a significant impact on improving the lives of the poorest in society. While indicating that these were also testimony to the government’s strong commitment to improving basic services and building a backbone of infrastructure (i.e., roads and electricity) that can facilitate economic growth, he concluded by underlining the central role of the government’s commitment to sustained progress in the development process.