According to data from the World Bank Ethiopia office, the World Bank’s lending commitment to Ethiopia has dropped to barely USD 244 million for 2022, down from USD 2.5 billion in 2021 and a record-high of USD 3.122 billion in 2018, quoted by The Reporter.
On the other hand, the IMF also did not to disburse nearly all of the USD 2.4 billion it promised to fund domestic economic reform (HGER). A team of experts from the central bank and the Ministry of Finance recently sat together to examine the three-year HGER established in 2019 just weeks before World Bank representatives arrived. Much of the economic aims remained unmet, with the exception of advances in privatization and a reversal in external debt expansion.
The gap between investment and domestic savings expanded to more than 12.4%, despite the Ministry of Planning and Development’s goal of reducing it to 7.9% from 16.5%.
As a last resort, the government turned to domestic financing, notably the Private Public Partnership (PPP), which failed to bear fruit. Over the last six months, the central bank increased Treasury bill supply by 315 percent. T-bills worth 312.9 billion birr were sold to SOEs and corporations, a 296 percent increase from the previous year.
133 billion birr was used to finance the government’s deficit, but this was insufficient to fulfill the federal government’s financial demands, therefore it borrowed from the central bank in the form of advance to balance the deficit.
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