The World Bank’s Board of Executive Directors has approved the Ethiopia First Sustainable and Inclusive Growth Development Policy Operation. This initiative supports home-grown reforms aimed at transitioning Ethiopia to a more inclusive economy, enhancing private sector contributions to growth, strengthening the financial sector, expanding trade options, and improving fiscal transparency. The operation includes a $1 billion grant and $500 million concessional credit from the International Development Association (IDA).
The reforms target increasing private sector orientation by addressing macroeconomic imbalances and expanding trading opportunities. They also aim to foster sustainable and inclusive growth through improved financial stability, increased fiscal transparency, better public spending effectiveness, enhanced performance of state-owned enterprises, and expanded social safety nets.
"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 poor and vulnerable people from the costs of economic adjustment and expanding opportunities for them to participate in the economy," said Maryam Salim, World Bank Country Director for Eritrea, Ethiopia, South Sudan, and Sudan.
Additionally, the operation promotes sustainable land and forest management and expands access to renewable energy to support Ethiopia's climate change goals and resilience against climate risks. This effort complements the World Bank's broader portfolio in Ethiopia that includes investments in various sectors such as health, education, social protection, energy, finance, digital infrastructure, agriculture, transport logistics, water sanitation, and urban development.
As one of Ethiopia’s largest providers of development finance, the World Bank Group extends over $2 billion annually in concessional financing through IDA. Current IDA commitments stand at $15.5 billion with nearly $7 billion available for disbursement. The International Finance Corporation (IFC) holds an investment portfolio worth $320 million while the Multilateral Investment Guarantee Agency (MIGA) is engaged with $1.15 billion in guarantees.
Looking forward, the World Bank plans to support Ethiopia’s goal of becoming a middle-income country by providing around $6 billion in new commitments over the next three fiscal years along with fast-disbursing budget support for economic reforms. IFC anticipates about $2.1 billion in investments while MIGA aims to expand its engagement under the World Bank Group Guarantee Platform. Subject to Board approval of new operations and availability of IDA resources this implies a total financial package exceeding $16.6 billion over three years.
The World Bank Group also expressed condolences following a devastating landslide in Gofa Zone that resulted in significant loss of life and displacement.