ADDIS ABABA — Prime Minister Abiy Ahmed stated that recent macroeconomic reforms have been pivotal in sustaining the existence of Ethiopian banks amid economic challenges. The reforms addressed significant systemic issues such as the lack of foreign currency from exports and the impact of a closed economy, which have been longstanding hurdles for the nation.

According to Ethiopian News Agency, who discussed the reforms yesterday, Ethiopia’s closed economic policies in past years have led to underwhelming foreign direct investment and challenges such as inflation spurred by an expansive parallel market. These issues had placed considerable strain on both citizens and the broader financial sector. The reforms aim to revitalize the economy by rectifying these fractures, ensuring a robust financial sector.

Specifically, the reforms have been critical for institutions like the Commercial Bank of Ethiopia, which has historically used funds from bond purchases to support development projects unable to repay their loans. This practice had put the bank at risk of becoming debt-ridden and potentially collapsing—a scenario that could have severely undermined public confidence in the banking system. The Prime Minister highlighted the importance of the reforms in preventing such outcomes, thereby protecting the integrity and trust in Ethiopian banks.

Further detailing the financial strategies, Prime Minister Abiy revealed that negotiations with the International Monetary Fund (IMF) and the World Bank have resulted in a significant financial infusion for the Commercial Bank of Ethiopia. Approximately 700 million USD was secured, which has not only stabilized the bank but also ensured its continued role in Ethiopia’s developmental agenda.