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Government of Ethiopia and AfDB Sign US$ 251-million Loan Agreement to Finance Basic Services

The Government of Ethiopia and the African Development Bank signed a US$ 251-million loan agreement Friday for the “Promoting Basic Services” (PBS) Phase III Program at a ceremony held at the Ethiopian Ministry of Finance and Economic Development in Addis Ababa. H.E. Ahmed Shide, State Minister of Finance and Economic Development, and Mr. Lamin Barrow, the Bank’s Resident Representative in Ethiopia, signed on behalf of the Government of Ethiopia and the African Development Bank respectively.

The African Development Fund (ADF) loan will provide Ethiopia with earmarked budget support over three fiscal years mainly for block grants to the regions to support expanding access and improvements to the quality of decentralized basic service delivery in the education, health and agriculture sectors, as well as upgrades to rural roads, water supply and sanitation. These services are crucial for raising the living standards of the population and for sustaining the gains made towards achieving the Millennium Development Goals (MDGs) in Ethiopia.

This PBS operation marks the third phase for this multi-donor supported program, which commenced in 2006 in support of the government’s pro-poor strategies for improving access to basic services. Other major development partners for the program include the World Bank, the U.K. Department for International Development (DFID) and the European Union. This PBS loan represents the Bank’s largest budget support operation for an ADF country, and brings the Bank’s net commitments to Ethiopia to slightly over US$ 1.3 billion.

Speaking at the ceremony, the State Minister Shide expressed the Government of Ethiopia’s appreciation for the Bank’s timely approval of financing for PBS III and commended the valuable contributions that the Bank is making in Ethiopia, particularly in supporting basic services and in critical sectors such as infrastructure. For his part, the Bank’s Resident Representative conveyed the condolences of AfDB President Dr. Donald Kaberuka and the entire staff of the African Development Bank to the government and people of Ethiopia, for the loss of Prime Minister Meles Zenawi. He also stated that the signing ceremony was a demonstration of the shared commitment to improve access to quality basic services in Ethiopia. He also expressed the Bank’s commitment, at this sad moment, to deepen its partnership with Ethiopia to sustain the Prime Minister’s legacy and realize the development aspirations of the country.  

The Bank’s loan will also support the Ethiopian government’s efforts to strengthen public financial management, transparency and social accountability systems, particularly at decentralized government levels.

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