The World Bank has approved a $1 billion Development Policy Operation (DPO) to support Ethiopia’s ongoing economic reforms and promote inclusive, private sector–driven growth. This funding package—comprising a $650 million grant and a $350 million concessional credit from the International Development Association (IDA)—builds on a previous operation approved in July 2024 under Ethiopia’s homegrown Economic Reform Agenda.
Since launching these reforms, Ethiopia has taken significant steps to reduce macroeconomic imbalances. Early results include narrowing exchange rate distortions, increasing domestic revenue, strengthening export performance, and moderating inflation.
The newly approved operation aims to deepen these reforms by enhancing financial intermediation, lowering barriers to trade and investment, increasing revenue collection, and promoting transparency in public finance. It also emphasizes support for vulnerable populations through initiatives that improve rural income opportunities, social protection systems, and human capital development.
This initiative is part of the World Bank Group’s broader partnership with Ethiopia, which spans critical sectors like health, education, finance, agriculture, infrastructure, and digital development. Through IDA, Ethiopia receives over $2 billion annually in concessional financing, including grants. The current IDA portfolio in the country totals $15.5 billion, with $6 billion still available for disbursement. In addition, the International Finance Corporation (IFC) maintains an investment portfolio of $320 million, and the Multilateral Investment Guarantee Agency (MIGA) has issued $1.15 billion in guarantees.
Looking forward, IDA plans to commit approximately $5 billion in additional support over the next three fiscal years, pending board approval and funding availability, further advancing Ethiopia’s goal of reaching middle-income status.
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