Photograph — Fortune

Ethiopia’s central bank is getting an additional $1 billion from the World Bank to aid its Homegrown Economic Reform, a new three-year economic program unveiled in September by Prime Minister Abiy Ahmed.

In an interview reported by CGTN, Yinager Dessie, the National Bank of Ethiopia’s Governor said that the Bank has given the country “some objectives that have to be met every year for another $1 billion,” as the government follows through on its commitment to economic reforms contained in the new plan. 

The Homegrown Economic Reform is an economic reform agenda for sustainable growth. Speaking on the plan, the World Bank’s Country Director, Carolyn Turk said, “The financing envelope depends on reallocation processes within the World Bank.” He also said that “the operation that we are preparing is strongly aligned to the homegrown reform strategy.”

Ethiopia has made significant strides in infrastructure and human capital over the past decade and the Homegrown Economic Reform is a program introduced to leverage the platforms for private sector development. The goal is to generate high-quality jobs, sustain economic growth, and create fiscal space for further public investments in infrastructure, human capital, and institutional building.

Since the inception of the 42-year-old government, the country has not only experienced sweeping political reforms, but also economic reforms that have attracted the assistance of the World Bank and other foreign investors.  Last year, the country requested technical and financial support from the international community to aid in implementing its new pathway to growth.

The request was honoured on  October 30, 2018, when the World Bank’s Board of Executive Directors approved $1.2 billion ($600 million grant and $600 million credit) from the International Development Association (IDA). This was in support of its policies designed to accelerate economic growth and achieve its vision of becoming a lower-middle-income country.

The drastic steps taken by Abiy’s government within his first year were the key components of the reforms that made the World Bank give Ethiopia $1 billion in direct budgetary support. That was the first time since 2005 when donors suspended budgetary support after disputed elections.

The PM’s ‘achievements’ include putting an end to internet shutdown, dismissing charges against diaspora-based media outlets, releasing prisoners and government critics, engaging exiled opposition groups, and repairing diplomatic relations with the country’s long-time neighbouring foe Eritrea.

The government also pledged to open up the state-owned telecoms company and airline to foreign investors for the first time. Abby’s government was able to pull a record $13 billion inflow of funds in his first year in office as he moves to reform the nation’s economy by allowing in more foreign capital.

Written by Ishioma Emi.

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