Ethiopian legislators ratify 2 loan agreements signed with IDA

Addis Ababa, January 27, 2025 (FMC) – During its 1st special session held today, FDRE House of People’s Representatives (HoPR) reviewed and approved two loan agreements signed by the Ethiopian government with the International Development Association (IDA).

It is learned that the loan agreements between the government of Ethiopia and IDA aim to boosting the financial sector and implementing the Ethiopian modern public service improvement project.

Ms. Meseret Haile, Government Minister of State for Development and Administration at HoPR, presented the brief statement and motion prepared regarding the draft bills..

She said the loan from IDA is a financial sector strengthening project that will support the reform measures being implemented by the Ethiopian government in the financial sector. The project will be implemented over the next 5 years.

The loan for the financial sector strengthening is US$ 700 million, and it will support the Commercial Bank of Ethiopia and the Development Bank of Ethiopia to carry out basic structural reforms and increase their capital, as well as to bring the sector into line with the international banking system, explained Ms. Meseret.

Similarly, US$ 70 million loan signed with IDA for the implementation of the Ethiopia Modern Public Service Reform Project will help to effectively mobilize and manage government finances, as well as to strengthen the institutional capacity to create an effective civil service.

It was also noted that the loan agreements are interest-free and subject to a mandatory fee of up to 0.5 percent of the unused amount, as determined by the bank, and will be paid over a period of 38 years, including a 6-year grace period.

For his part, State Minister for Finance at the Ministry of Finance Mr. Eyob Tekaign told the parliament that Ethiopia’s loan agreement with IDA will help further improve the soundness and competitiveness of the financial sector.

He said that the macroeconomic reform will increase the capital capacity of the Commercial Bank of Ethiopia (CBE). The loan, according to Eyob, will also help modernize the operations of the Development Bank of Ethiopia (DBE).

The State Minister also said that Ethiopia has been reducing its debt burden over the past four years.

After discussing the loan agreements, the Ethiopian parliament approved the agreements with a majority vote and 3 abstentions.