The World Bank’s Board of Executive Directors has approved a credit amounting to $1.5 billion to spur Ethiopia’s economic efforts to boost sustainable development and promote economic inclusivity within the private and public sectors, with an additional focus on building climate change risk management.
The lender has reiterated that despite striving to have the private sector contribute to the country’s economic growth, the credit will also offer a long-term breakthrough during economic challenges for the most vulnerable.
The $1 billion grant and $500 million concessional credit from the International Development Association are set to support the country’s effort to address challenging macroeconomic variations and scale opportunities in market vulnerabilities.
The World Bank Country Director, Maryam Salim, stated that the implementation of the reforms could help the country realize its economic growth potential, but focusing on protecting the most vulnerable through the creation of more opportunities and enhancing a suitable environment for them to participate in the economy should be the ultimate goal.
“Successful implementation of these reforms can help the country reach its full potential so more Ethiopians can thrive. Importantly, there is a strong emphasis on protecting the poor and vulnerable people from the cost of economic adjustment and expanding opportunities for them to participate in the economy,” Maryam Salim said.
The International Development Association’s (IDA) commitments to accelerate Ethiopia into a fast-growing middle-income economy currently stand at $15.5 billion, with $6 billion in new commitments over the next three fiscal years. IDA still remains one of Ethiopia’s biggest financial supporters, among the 39 countries it has funded in the last six decades.
Ethiopia’s economy grew by 0.7% in the 2022–2023 fiscal year from 6.4% in 2021–2022, despite the recurring high inflation rate. According to data from the African Development Bank, Ethiopia’s economic growth is on a downward trajectory due to fiscal consolidation. The country’s economic outlook in 2024/25 is poised to drop by 0.4% from 7.1% this year.
