The United Arab Emirates (UAE) is to deposit $1 billion in Ethiopia's central bank to ease the latter's foreign exchange shortage.
The sum is part of a $3 billion aid and investment pledge from the UAE to Ethiopia announced Friday. The news came as Abu Dhabi's Crown Prince Sheikh Mohammed bin Zayed Al Nahyan visited Ethiopian Prime Minister Abiy Ahmed in Addis Ababa.
Ethiopia's foreign exchange shortage is due in part to its spending big on infrastructure projects. The current total left in the East African country's coffers is equivalent to less than one month's worth of imports, Reuters has reported.
In April, Abiy said that Ethiopia's foreign exchange shortage could last 15 to 20 years, and that more cooperation with the private sector was needed to secure the country's finances.
Over the weekend, Ethiopia and neighboring Somalia announced that they were investing in four seaports on the Red Sea to draw in foreign investment. Abiy and Somalian President Mohamed Abdullahi Farmajo, speaking in Somalia's capital Mogadishu, issued a joint statement of pledges to cooperate on areas including infrastructure and visa services, according to Reuters.
The Red Sea coastline is strategic because it leads to the Suez Canal, a shipping channel which effectively serves as a gateway between Eastern and Western markets.
Landlocked Ethiopia is keen to shore up its international trade infrastructure, for example taking a stake in the Port of Djibouti in May.
The weekend's news is the latest in a slew of reforms coming out of the Ethiopian government.
In early June, lawmakers voted to lift Ethiopia's state of emergency two months early. This was imposed following the sudden resignation of former Prime Minister Hailemariam Desalegn in February following anti-government protests fueled by ethnic tension.