Technical assistance to the EU Delegation to Ethiopia in Macroeconomics, budget support, PFM, private sector analysis

The EU and its member states have traditionally considered Ethiopia, due to its population, and economic size a key strategic partner for regional stability. Ethiopia is perceived as offering potential investment opportunities for EU companies, notably in the current Global Gateway approach. Ethiopia is also an important partner of the EU in preventing irregular migration to Europe. In December 2020, the EU suspended all budgetary support to Ethiopia 2-months after the start of conflict in the country's Tigray region and other parts of the country. EU Budget support was over 200M EUR, and its suspension (alongside the suspension of funding from other development partners and the IMF) negatively impacted the country's ability to finance its own development agenda. Additionally, inflation and limited foreign currency reserves, affected the economic environment for the private sector. Combined, these factors weakened Ethiopia's ability to fully exploit its human and economic resources. Normalising the between the EU and Ethiopia was important to both parties, and recent positive developments have started to achieve this. In October 2023, European Union Commissioner Jutta Urpilainen met with Ethiopian government officials and announced $680 million in support from the EU via the Multi-annual Indicative Programme (MIP). Quote, "Ethiopia is a strategic partner for the European Union, and today we are able to take important steps forward in the afternoon, when we are signing our multiannual indicative program for our bilateral cooperation," said Urpilainen. The MIP will focus on three priority issues: a green agenda, human development and peace building. The global objective of this project is to provide a "technical assistance to the EU Delegation to Ethiopia in economic, Public Finance Management (PFM), and private sector/trade analysis. This technical assistance supports the EUD in providing key guidance and analysis in making informed decisions on the provision of EU budget support to Ethiopia. To enable the EUD to report and make informed decisions on the criteria for resuming budget support, it is important that it has reliable and up to date economic and trade information on Ethiopia. This technical assistance provides this support through evidenced and independent research and reporting to the EUD.