November 26, 2022

Kristalina Georgieva met Abiy Ahmed Ali at EU-Africa summit in Brussels but IMF money will not start flowing to Ethiopia again until peace and stability return in Tigray

IMF Managing Director Kristalina Georgieva meets with Ethiopian Prime Minister Abiy Ahmed Ali on the sidelines of the EU-Africa summit in Brussels, Belgium, on Thursday, February 17, 2022.
IMF Managing Director Kristalina Georgieva meets with Ethiopian Prime Minister Abiy Ahmed Ali on the sidelines of the EU-Africa summit in Brussels, Belgium, on Thursday, February 17, 2022.

The Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva met with Prime Minister Abiy Ahmed Ali of Ethiopia in Brussels, Belgium, on Thursday, on the sidelines of the EU-Africa summit. However, IMF money will not start flowing to Ethiopia again until peace and stability return to Tigray and all over the country.

“I had a very constructive discussion with PM @AbiyAhmedAli in Brussels at the EU-Africa Summit. We focused on the way forward for Ethiopia’s economy for the benefit of all the people of the country,” Georgieva, a Bulgarian economist who fought to keep her own job last year after false allegations against her were dismissed by the IMF board following a painstaking investigation.

African and European leaders come together for the EU-Africa summit in Brussels, Belgium, on Thursday, February 17, 2022

On Thursday last week, the International Monetary Fund (IMF) insisted that it remains “concerned” about the situation in Ethiopia, and that it still cannot release the country’s growth forecast for the year 2022 because “uncertainty related to the conflict makes it difficult.”

In its World Economic Outlook last October, the IMF did not release a GDP growth forecast for Ethiopia for the next four years. Other countries excluded were Afghanistan, Libya and Syria.

On Thursday, the multilateral lender said once again that it was unable to refresh microeconomic projections for Ethiopia because of the “uncertainty related to the conflict” between the Ethiopian government and the Tigray People’s Liberation Front.

“On Ethiopia, we are of course monitoring that situation, we’re concerned about the situation and as I say, monitoring it very closely. With heightened uncertainty on the ground and its impact on the economy, it’s difficult to move to program discussions right now. But we stand ready to engage on program discussions when the time is right,” Rice added.

IMF spokesperson Gerry Rice

Economists have asserted that missing data forecasts impact the business environment as investors rely on them before investing in a particular country.

Mid last year, the IMF urged swift formation of creditor committee for Ethiopia to “enable the timely delivery of the debt operation” that Ethiopia was requesting.

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“The IMF strongly encourages the swift formation of the creditor committee for Ethiopia to enable the timely delivery of the debt operation that Ethiopia is requesting,” Gerry Rice said last June.

“Ethiopia requested in February to G20 and Paris Club creditors to benefit from a debt operation under the G20 “Common Framework.” The authorities’ aim is to create fiscal space for development spending and lower the risk of debt distress rating to moderate by reprofiling debt service obligations. The formation of the committee will help Ethiopia in this regard,” Rice wrote.

But the conflict in Tigray worsened again by the last quarter of last year, complicating things for Ethiopia. Many more people were displaced and the Ethiopian government expelled seven UN officials from Addis Ababa for “interfering in internal affairs” of the country, straining already bad relations with the international community.

On November 2, 2021, U.S. President Joseph R. Biden Jr. announced that he was terminating AGOA trade agreement with Ethiopia, Guinea and Mali , three African nations over human rights abuses and coups.

In a letter to the United States Congress, President Biden wrote, “In accordance with section 506A(a)(3)(B) of the Trade Act of 1974, as amended (19 U.S.C. 2466a (a)(3)(B)), I am providing advance notification of my intent to terminate the designation of the Federal Democratic Republic of Ethiopia (Ethiopia), the Republic of Guinea (Guinea), and the Republic of Mali (Mali) as beneficiary sub-Saharan African countries under the African Growth and Opportunity Act (AGOA).

President Joe Biden walks along the West Colonnade, Friday, November 5, 2021, on his way to the Oval Office. (Official White House Photo by Adam Schultz) This official White House photograph is being made available only for publication by news organizations and/or for personal use printing by the subject(s) of the photograph. The photograph may not be manipulated in any way and may not be used in commercial or political materials, advertisements, emails, products, promotions that in any way suggests approval or endorsement of the President, the First Family, or the White House.

“I am taking this step as Ethiopia, Guinea, and Mali are not in compliance with the eligibility requirements of section 104 of the AGOA — in Ethiopia, for gross violations of internationally recognized human rights; in Guinea, for not having established, or not making continual progress toward establishing, the protection of the rule of law and of political pluralism; and in Mali, for not having established, or not making continual progress toward establishing, the protection of the rule of law, political pluralism, and internationally recognized worker rights, and for not addressing gross violations of internationally recognized human rights. 

“Despite intensive engagement between the United States and the Governments of Ethiopia, Guinea, and Mali, these governments have failed to address United States concerns about their non-compliance with the AGOA eligibility criteria.   

“Accordingly, I intend to terminate the designation of Ethiopia, Guinea, and Mali as beneficiary sub-Saharan African countries under the AGOA as of January 1, 2022.  I will continue to assess whether the Governments of Ethiopia, Guinea, and Mali are making continual progress toward meeting the AGOA eligibility requirements.”

That made things even more difficult for investors to do business with Ethiopia. Now, the country seems to be turning to China, Russia and other country for investments.

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