The Ethiopian House of Peoples’ Representatives (HoPR) has officially approved an €80 million (approximately 5.2 billion ETB) loan agreement secured from the French Development Agency (AFD). During its 17th regular session held on Tuesday, the House voted unanimously to ratify the deal, which is specifically earmarked to bolster the country’s ongoing Homegrown Economic Reform Agenda.
This substantial financial injection is designed to provide the government with the necessary fiscal space to stabilize the macroeconomy. Officials noted that the funds will be instrumental in curbing rampant inflation and enhancing domestic revenue collection systems. By addressing these structural bottlenecks, the government aims to create a more predictable environment for private investment and sustainable growth.
The terms of the loan are characterized by highly concessional rates, reflecting the strategic partnership between Addis Ababa and Paris. According to the agreement, the loan carries a low interest rate of 1.1%. Ethiopia will benefit from a five-year grace period, with the total repayment scheduled to be completed over a span of 15 years. This structure is intended to minimize immediate pressure on the national treasury while the reforms take root.
During the session, State Minister for Government Whip, Dr. Mihretu Shanko, clarified the logistical flow of the funds. He informed lawmakers that the finance would be deposited directly into the central treasury. “This funding is specifically designated for macroeconomic stabilization and the energy sector,” Dr. Shanko stated, emphasizing that the energy initiatives are crucial for powering the industrial components of the reform plan.
Following a detailed deliberation on the potential impact and debt sustainability of the credit facility, the Council passed the draft proclamation into law. The agreement is now officially designated as Proclamation No. 1414/2018. This approval marks another step in Ethiopia’s efforts to diversify its external financing sources as it navigates complex economic transitions and infrastructure demands.