Ethiopia’s Parliament has approved a US $275M financing agreement with the International Development Association (IDA) aimed at expanding urban water supply and sanitation infrastructure as the country seeks to improve access to clean water and essential public services.
The agreement was unanimously ratified under Proclamation No. 1335/2016, paving the way for the government to implement the next phase of key urban water development projects over the coming three years.
The funding will be directed toward completing ongoing projects launched under a previous financing arrangement while also addressing budget gaps that have delayed implementation. The additional resources are expected to support the second phase of Ethiopia’s Urban Drinking Water and Sanitation Programme, which is designed to improve water availability and sanitation services in growing urban centres.
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Concessional terms
Chief Government Whip Tesfaye Belejge said the financing would help ensure the timely completion of existing projects while enabling the government to continue expanding water infrastructure to meet increasing demand. He noted that the programme is intended to enhance access to reliable and safe drinking water for urban residents and contribute to improved sanitation systems.
The financing package comes under concessional terms, with no standard interest charges on the principal amount. However, Ethiopia will pay a 0.5 percent annual commitment fee on any undisbursed portion of the funds, while the institution administering the loan will receive a service fee of up to 0.75%.
The latest financing forms part of Ethiopia’s broader efforts to strengthen public infrastructure and improve the delivery of essential services amid rapid urbanisation. By investing in water supply and sanitation systems, the government aims to improve public health, support sustainable urban growth and enhance the quality of life for millions of people living in cities across the country. The approval also underscores Ethiopia’s continued partnership with international development institutions in financing infrastructure projects considered critical to the country’s long-term economic and social development.
