Ethiopia External Funding For 2022/2023

In the fiscal year 2022/23 Ethiopia awaits budgetary grants reaching a projected amount of nearly $706 million, and external budgetary borrowing estimated at $776 million. Notably, major contributors to the budgetary grants include esteemed institutions such as the World Bank, the European Union (EU), the African Development Bank (AfDB), as well as influential stakeholders like the United Kingdom (UK) and the United States (US). In terms of external budgetary borrowing, the World Bank emerges as a significant source, complemented by select bilateral loans from countries such as China and Italy. This article delves into the anticipated funding landscape for Ethiopia in the upcoming fiscal year, shedding light on the magnitude of support from key international players.

Budgetary grants of close to $706 million (38.9 billion Ethiopian Birr) are anticipated this fiscal year, with the largest sources in the budget shown as coming from the World Bank, the EU, AfDB, UK, and US.

Before going over Multilateral Institution Grants, let us define what multilateral institutions are:

Multilateral institutions are organizations composed of multiple countries that work together to address common challenges and promote cooperation on various issues. These institutions serve as platforms for member states to engage in diplomatic negotiations, make collective decisions, and implement joint initiatives. They play a crucial role in facilitating global governance, fostering international cooperation, and maintaining stability in areas such as economics, trade, security, human rights, and the environment.

Multilateral institutions often provide grants to member countries or other entities to support various initiatives and projects. These grants are typically aimed at promoting development, addressing global challenges, and achieving specific objectives within the institution's mandate.

The graph bellow provides funding allocations in millions of US dollars for various multilateral institutions and programs. These allocations support a range of initiatives, including development projects, poverty reduction, healthcare, and sustainable development goals. The total funding amounts to $451 million, with significant allocations coming from institutions such as the African Development Bank (ADB), the European Union (EU), the IDA--World Bank, UNICEF, and SDG Implementation. Other organizations and programs also receive funding, contributing to efforts in their respective areas of focus.

Multilateral Institution Grants: Total = $451 million (24.9 billion Ethiopian Birr)

Bilateral grants refer to financial assistance provided by one country directly to another country for development purposes, without the involvement of multilateral institutions. These grants are usually given with the intention of promoting economic development, poverty reduction, infrastructure projects, capacity building, healthcare, education, and other priority areas of the recipient country. Bilateral grants are often a means for donor countries to support the development goals and priorities of partner countries, strengthen diplomatic relations, and foster cooperation.

This graph presents funding allocations in millions of US dollars for various countries and their respective development agencies. The total funding amounts to $116 million. Some notable allocations include $9 million from Canada (CIDA), $4 million from Finland (DIDC), $8 million from Italy, $6 million from Ireland, and $3 million from Sweden (SIDA). The United Kingdom has the highest allocation with $46 million, followed by the United States (USAID) with $29 million. Germany (KfW), Netherlands (KNCB), Denmark (DANIDA), and others receive smaller allocations ranging from $2 million to $4 million. It is noteworthy that China, France, Korea (KOICA), and Spain have zero allocations in the provided data. These funds contribute to various development projects, initiatives, and partnerships supported by the respective countries' development agencies.

Bilateral Grants: Total = $116 million (6.4 billion Ethiopian Birr)

Additionally, a grant of $139 million (7.7 billion Ethiopian Birr) is funded by the European Union (EU) for Protecting Basic Services Program.

Source: MoF Budget Document. Conversion to USD based on assumed FY2022-23 year-avg Birr/USD rate of 55.13

External budgetary borrowing of $776 million (42.8 billion Ethiopian Birr) is, in turn, largely anticipated from World Bank loans, supplemented also by some limited bilateral loans from countries such as China and Italy.

Multilateral institution are financial instruments provided by international organizations to member countries for development projects, infrastructure investments, and policy reforms. These loans are aimed at promoting economic growth, poverty reduction, and sustainable development. Unlike grants, loans are expected to be repaid over a specified period with interest. Multilateral institutions, such as the World Bank, International Monetary Fund (IMF), and regional development banks, are the primary providers of multilateral loans. These institutions have established frameworks and lending programs to support member countries' development efforts. The loans they offer typically have longer repayment periods, lower interest rates, and more flexible terms compared to commercial loans.

This graph bellow presents loan allocations in millions of US dollars from various multilateral institutions, totaling $428 million. The IDA--World Bank has the largest allocation of $273 million, followed by the World Bank with $127 million. The African Development Bank (ADB) and Arab Bank for African Development (BADEA) have allocated $8 million and $7 million respectively, while the International Fund for Agricultural Development (IFAD) has allocated $14 million. These loan allocations demonstrate the commitment of multilateral institutions to providing financial support for development projects, poverty reduction, and economic growth in Ethiopia.

Multilateral Institution loans: Total = $428 million (23.6 billion Ethiopian Birr)

Bilateral loans refer to loans provided directly from one country to another for various purposes, including development projects, infrastructure investments, economic cooperation, and other bilateral agreements. Unlike multilateral loans, bilateral loans involve a direct lending relationship between two countries, without the involvement of international organizations.

This graph presents the allocation of bilateral loans in millions of US dollars from various countries and institutions, totaling $108 million. China has the largest allocation of $16 million, followed by China EXIM Bank with $43 million. Other notable allocations include $10 million from Italy, $7 million from Finland (DIDC), and $5 million from Japan (JICA). The remaining allocations range from $2 million (Korea - KOICA) to $1 million (Saudi Fund, United Kingdom, United States - USAID). These bilateral loans support a range of development projects and cooperation initiatives, contributing to economic growth, infrastructure development, capacity building, and other priority areas identified by the borrowing countries.

Bilateral loans: Total = $108 million (5.9 billion Ethiopian Birr)

Additionally, $240 million (13.2 billion Ethiopian Birr) is loaned from the IDA--World Bank for Protecting Basic Services Program.

Source: MoF Budget Document. Conversion to USD based on assumed FY2022-23 year-avg Birr/USD rate of 55.13