East Africa's most populous country, already struggling with high inflation, became the third African state in as many years to default on its debt in December.

Ethiopia hasn't received any IMF funds since 2020 and its last lending arrangement with the fund went off track in 2021. The federal government and a rebellious regional authority signed a deal in late 2022 to end a two-year civil war.

The IMF, which said progress was made during its latest visit, has not said that currency reform is necessary for its support. But the Fund usually favours flexible, market-determined exchange rates. Ethiopia has requested $3.5 billion of support from the IMF, sources told Reuters last year.

Chronic foreign currency shortages and a tightly controlled exchange rate has allowed a black market to flourish, on which the birr currently trades at between 117 and 120 per dollar, more than double the official rate of around 56.7.

--Reuters--