Latest news with #IMFExecutiveBoard
Zawya
2 days ago
- Business
- Zawya
International Monetary Fund (IMF) Staff Conclude Article IV Discussions and Reach Staff-Level Agreement on the Third Review of the Extended Credit Facility for Ethiopia
IMF staff and the Ethiopian authorities have reached staff-level agreement on economic policies to conclude the third review of the four-year US$3.4 billion Extended Credit Facility arrangement. Once approved by the IMF Executive Board, Ethiopia will gain access to about US$260 million in financing. Ethiopia's macroeconomic performance has exceeded program expectations, with better-than-forecast results for inflation, export growth, and international reserves. Maintaining reform momentum remains essential for consolidating recent gains, correcting macroeconomics imbalances, restoring external debt sustainability, laying the foundations for high, private sector-led growth, and ensuring the success of Ethiopia's homegrown reform agenda. A staff team from the International Monetary Fund (IMF) led by Mr. Alvaro Piris, visited Addis Ababa from April 3 to 17, 2025, to discuss the 2025 Article IV consultation and the third review under the Extended Credit Facility (ECF). Discussions continued at the Spring Meetings in Washington DC, April 21-28, and subsequently. The ECF arrangement was approved by the IMF Executive Board on July 29, 2024, for a total amount of US$3.4 billion (SDR 2.556 billion). Subject to approval by the IMF Executive Board, the third review will make available about US$260 million (SDR191.7 million), bringing total IMF financial support under the ECF arrangement so far to about US$1,849 million (SDR1,406.4 million). Today, Mr Piris issued the following statement: 'The IMF staff team and the Ethiopian authorities have reached staff-level agreement on the third review of Ethiopia's economic program under the ECF arrangement. The agreement is subject to the approval of IMF management and the Executive Board in the coming weeks. A memorandum of understanding with official creditors is expected to be agreed ahead of the IMF Board's consideration of the third review. 'The authorities' policy actions in the first year of the program have yielded strong results. The transition to a flexible exchange rate regime has proceeded with little disruption. Measures to modernize monetary policy, mobilize domestic revenues, enhance social safety nets, strengthen state-owned enterprises, and anchor financial stability continue to show encouraging results. Macroeconomic indicators have performed better than expected, with substantially better outcomes than forecast for inflation, goods exports, and international reserves. 'Recent policy action should help deepen the FX market and tackle remaining distortions. While real exchange misalignment has been corrected and FX availability has improved from a year ago, the spread between the official and parallel market widened again in early 2025 and high fees and commissions persist. Actions that are being rolled out to enhance transparency, reduce costs, ease restrictions on current account transactions, and strengthen prudential regulation will help to improve the functioning of the FX market. 'Maintaining reform momentum will be key to consolidating gains and securing sustainable high growth. Continued tight monetary and financial conditions will be important for managing inflation and exchange rate expectations. Further revenue mobilization is needed to provide sustainable financing for critical development spending. Reforms to improve the business environment, ensure fair taxation practices, encourage foreign direct investment, and facilitate open dialogue with business will be important to secure private sector investment. Efforts to end the remaining elements of financial repression and develop the capital market will help to mobilize savings and support the efficient allocation of capital. 'The staff team is grateful to the authorities for the excellent policy discussions and their strong commitment to the success of the IMF-supported economic program. The team met with Minister of Finance Ahmed Shide, Governor of the National Bank of Ethiopia Mamo Mihretu, State Minister of Finance Eyob Tekalign, and other senior officials. Staff also had productive discussions with representatives of banks and businesses that are operating in a range of sectors and representatives of civil society.' Distributed by APO Group on behalf of International Monetary Fund (IMF).
Mada
3 days ago
- Business
- Mada
IMF still pushing for privatization after otherwise ‘relaxed' Egypt loan review
An International Monetary Fund (IMF) delegation concluded its fifth review of the ongoing US$8 billion loan program with Egypt this week in Cairo with praise for the country's economic performance. However, the fund noted that further steps toward privatization are required, stressing 'the need to accelerate reforms aimed at reducing the state's footprint in the economy.' The current program began in 2022, as Egypt's economy faltered in the economic tailwind caused by Russia's invasion of Ukraine. The agreement has been marked by friction between the IMF and Egyptian authorities, which have been cautious not to spark public anger while implementing recommended policies that undermined Egyptians' purchasing power. The praise Egypt received this time, however, appeared to reflect the degree of 'laxity' shown by Egyptian officials and 'leniency' on the part of the IMF Executive Board during the talks, a government source told Mada Masr on condition of anonymity. Pressure on Egypt has diminished somewhat, according to a member of the House of Representatives' Planning and Budget Committee who attributed the IMF's softened stance to the country's delivery on key loan requirements in ways that 'exceeded expectations.' Liberalizing the exchange rate and monetary tightening are at the forefront of these requirements, the source said. Moving away from a managed peg, the central bank has devalued the Egyptian pound multiple times against the dollar since 2022, allowing daily fluctuations in the exchange rate in recent months. The source also mentioned recent hikes in fuel and electricity prices. Delays in implementing scheduled price increases in both sectors, recommended under the IMF's program to reduce expenditure on subsidies, had been a major stumbling block in completing past reviews. The government has hiked fuel prices by as much as 87 and 207 percent in recent years. During the same period, electricity rates increased by 40-65 percent. Natural gas bracket prices, which had remained unchanged for three years, were raised in September by 15-25 percent. Further hikes in fuel and electricity prices are expected in the upcoming fiscal year, the parliamentary source and a former Petroleum Ministry official told Mada Masr. Inflation has slowed overall, and private investment has increased relative to public, the IMF said. Inflation peaked at around 30 percent in 2024 and has slowed by around 13 percent, according to recent figures. The statement the IMF released on Tuesday to mark the end of its delegation's visit to Cairo also praised a 35 percent increase in the share of private investment relative to public investment over fiscal year 2024/25 compared to FY 23/24. Government investment has shrunk over the past three years from around $15 billion annually to less than $10 billion, the parliamentary source noted. The program has included diminishing expenditure on key public services like education and health. Another reason the review went smoothly is the relative easing of the acute dollar shortage that had frozen imports and economic activity in previous years. 'The government has reopened imports, but they remain constrained primarily by falling demand and purchasing power,' the source said. Speaking to Mada Masr, a financial analyst at an investment firm echoed this view, pointing to around $35 billion in hot money inflows that have helped shield Egypt from a dollar gap. This, they said, has given the government some breathing room, especially with the program set to expire in October 2026. $4.8 billion are yet to be disbursed from the IMF's $8 billion loan. What remains unresolved in the program, the parliamentary source added, is the state's role in the economy. Privatization has been a priority for the IMF in successive package reforms it has recommended since 2016. The source said that the government has offered several explanations for its slow progress toward privatization, including a lack of satisfactory bids for state assets and the need to restructure some of them before they can be put up for sale. In its statement, the IMF emphasized the need to accelerate reforms aimed at reducing the state's footprint in the economy, primarily through the sale of state-owned assets in sectors the government had pledged to exit under its State Ownership Policy. This, the statement said, 'will play a critical role in strengthening the ability of the private sector to better contribute to economic growth in Egypt.' It also warned of Egypt's widening budget deficit, driven by a surge in imports and a decline in fuel exports due to falling production levels. A drop in Suez Canal revenues also contributed to the deficit, the statement said, offsetting gains from tourism, remittances and non-oil exports. It stressed the need to boost government revenues by broadening the tax base to bolster the state's capacity for social and developmental spending, while welcoming recent government efforts to streamline tax and customs procedures to 'increase efficiency and build confidence' — reforms it said are starting to yield positive results. The praise came even as the IMF has yet to publish its fourth review's staff report, which the Egyptian government requested be withheld. The review was approved in March, unlocking a $1.2 billion disbursement. At the time, the IMF also approved Egypt's request for a Resilience and Sustainability Facility agreement, allowing it to access an additional $1.3 billion in financing. The program terms are yet to be announced. Meanwhile, Egypt faces over $6 billion in outstanding payments to the fund through the end of next year, including nearly $3.8 billion due in 2025, according to IMF data. This issue falls under what the IMF describes as Egypt's 'deeper reforms' — measures that are expected to 'unlock the country's growth potential, create high-quality jobs for a growing population, and sustainably reduce its vulnerabilities and increase the economy's resilience to shocks.' Egypt began negotiating with the IMF for a $3 billion loan in late 2022, but the program stalled for several months. Talks resumed in late 2023 and concluded with the loan's augmentation adjustment in two years, which brought the dollar to LE50.
Reuters
5 days ago
- Business
- Reuters
IMF reaches agreement under first review of $1.4 billion El Salvador program
May 27 (Reuters) - The International Monetary Fund said on Tuesday it had reached an agreement with El Salvador to disburse about $120 million, following the first review of a $1.4 billion 40-month program. The disbursement is subject to approval by the IMF executive board. In February, the IMF approved the $1.4 billion extended fund facility arrangement for El Salvador. "Most program targets set for the first review were comfortably met, and implementation of the structural benchmarks is progressing well," the IMF said in a statement. In March, the country separately secured a $500 million loan from the Inter-American Development Bank to shore up its budget.
Business Insider
25-05-2025
- Business
- Business Insider
IMF backs $630 million credit deal with Central African nation
Chad has reached a staff-level agreement with the International Monetary Fund (IMF) as it seeks to secure a four-year Extended Credit Facility (ECF) program valued at approximately $630 million. Chad has reached a staff-level agreement with the IMF for a prospective four-year Extended Credit Facility program worth $630 million. If approved by the IMF, the program aims to reduce Chad's public budget deficit and ensure fiscal consolidation through various reforms. This IMF support is expected to attract further international financing, aiding Chad's implementation of comprehensive development and reform plans. Announced in May 2025 following negotiations in N'Djamena, the agreement awaits approval by the IMF Executive Board and the securing of necessary financing assurances. The program is designed to support Chad's long-term development agenda, anchored by its Vision 2030 framework and the accompanying National Development Plan (NDP). Vision 2030, officially titled ' The Chad We Want, ' sets the country's strategic direction to become an emerging economy by 2030. It focuses on strengthening good governance and the rule of law, promoting national unity, and creating conditions for sustainable socio-economic development. The Vision 2030 framework is structured around four strategic axes: Strengthening national unity through promoting peace, civic values, and cultural inclusion. Enhancing good governance and the rule of law, including improving public administration, economic governance, democratic culture, and security. Developing a diversified and competitive economy, emphasizing infrastructure, domestic savings, and private investment. Improving the quality of life for the Chadian population, focusing on environmental sustainability and social well-being. If approved, the IMF program would align with these strategic priorities, aiming to reduce Chad's public budget deficit from over 4% of GDP to an average of 1.5% over the next four years. This fiscal consolidation would be supported by reforms in revenue mobilization, expenditure control, and restructuring of state-owned banks to enhance financial sector stability. Chad's economic outlook Chad's economy grew by an estimated 3.5% in 2024, down from 5% in 2023, with growth expected to slow slightly to 3.3% in 2025. The economic outlook remains vulnerable due to external shocks including fluctuating oil prices, Chad's main revenue source, regional security challenges, and reduced official development assistance. The proposed program also encourages Chad's continued collaboration with the Central African Economic and Monetary Community (CEMAC) to maintain macroeconomic and financial stability in the region. Beyond immediate fiscal objectives, the anticipated IMF support is expected to catalyze additional financing from international partners, bolstering Chad's efforts to implement its ambitious reform agenda and development strategy. Chad's Vision 2030 and the National Development Plans (2017–2021, 2022–2026, and forthcoming 2027–2030) provide a comprehensive roadmap for structural transformation. These plans emphasize social policy improvements, economic diversification, governance reforms, and environmental sustainability as key pillars for achieving long-term stability and growth. The IMF mission, led by Julien Reynaud, expressed appreciation for the Chadian government's cooperation during the May 5–16 discussions. The mission engaged with senior government officials, representatives from civil society, the financial sector, and development partners to ensure broad-based support for the program. As Chad navigates a complex regional environment marked by conflict and economic pressures, the IMF-backed program, if approved, would represent a critical opportunity to strengthen fiscal discipline, enhance governance, and accelerate development goals for the benefit of its population.
Hans India
24-05-2025
- Business
- Hans India
After India's objections, IMF justifies bailout package to Pak
New Delhi: Amid India's objections to the International Monetary Fund bailout package to Pakistan, the IMF has said the debt-ridden country 'met all the required targets' to receive the latest loan instalment. The IMF recently gave the nod to a $ 1 billion (over Rs 8,000 crore) bailout package to Pakistan even as India expressed reservations. The bailout came when Pakistan was retaliating to India's Operation Sindoor -- a military strike on terror infrastructure in Pakistan and Pakistan-Occupied Kashmir (PoK). India had asked it to reconsider the bailout as Pakistan allows terrorists to use its soil for launching state-sponsored attacks against Indian citizens. Last week, Defence Minister Rajnath Singh said that the aid to Pakistan is a 'form of indirect funding to terror' and had cautioned the international agencies, including the IMF. The global lender disbursed $2.1 billion to Pakistan in two tranches under its Extended Fund Facility (EFF) programme. The IMF and Pakistan last year signed a deal for $7 billion under the EFF. Defending its loan, IMF's director of the communications department, Julie Kozack, said on Thursday, 'Our Board found that Pakistan had indeed met all of the targets. It had made progress on some of the reforms, and for that reason, the Board went ahead and approved the programme.' Kozack also made a short statement with regards to the conflict between India and Pakistan and hoped for a peaceful resolution between the two countries. 'With respect to Pakistan and the conflict with India, I want to start here by first expressing our regrets and sympathies for the loss of life and for the human toll from the recent conflict. We do hope for a peaceful resolution of the conflict,' she said. She said the IMF Executive Board had approved Pakistan's EFF program in September of 2024. And the first review at that time was planned for the first quarter of 2025. 'Consistent with that timeline, on March 25th of 2025, the IMF Staff and the Pakistani authorities reached a Staff-Level Agreement on the First Review for the EFF. That agreement, that Staff-Level Agreement, was then presented to our Executive Board, and our Executive Board completed the review on May 9th. As a result of the completion of that review, Pakistan received the disbursement at that time.' She said it was part of a standard procedure under programmes that the IMF Executive Board conducts periodic reviews of lending programs to assess their progress. 'And they particularly look at whether the program is on track, whether the conditions under the program have been met, and whether any policy changes are needed to bring the program back on track. And in the case of Pakistan, our Board found that Pakistan had indeed met all of the targets. It had made progress on some of the reforms, and for that reason, the Board went ahead and approved the program,' she said.
