Ethiopia’s Ministry of Finance has partnered with the World Bank by signing a $700 million financing agreement aimed at enhancing the stability, sustainability, and modernization of the country’s financial sector.
Ahmed Shide, Ethiopia’s Minister of Finance, and Maryam Salim, the World Bank Country Director for Ethiopia, Eritrea, Sudan, and South Sudan, signed the agreement, which supports the implementation of the Financial Sector Strengthening Project (FSSP).
The FSSP is a key initiative designed to advance critical reforms in Ethiopia’s financial sector, including the recapitalization of major state-owned banks—the Commercial Bank of Ethiopia (CBE) and the Development Bank of Ethiopia (DBE). This initiative aligns with Ethiopia’s ongoing reforms to modernize and liberalize its banking sector.
A significant portion of the funding will be allocated to addressing legacy debt issues, improving asset quality, and ensuring compliance with capital adequacy requirements for CBE and DBE. The move follows the government’s issuance of 900 billion ETB in debt securities to settle CBE’s non-performing loans and facilitate its recapitalization.
Additionally, the financing aims to strengthen Ethiopia’s banking sector by enhancing supervisory and regulatory frameworks, bolstering financial stability, and expanding access to capital. These efforts are expected to create jobs, drive economic growth, and ensure the sector’s long-term sustainability.
The Ministry of Finance emphasized that this partnership underscores Ethiopia’s commitment to bold financial reforms to modernize its economy and attract investment.
