Business & trade at international leval Foreign Economic Relations: Ethiopia has long maintained commercial relations with

its immediate neighbors, Sudan and Yemen, and with West European countries, notably Britain, Germany, and Italy. Recently, however, trading relations have broadened somewhat. As of 2002, Ethiopias most important markets are in Europe, especially Germany, Italy, and the United Kingdom, now joined by Japan, all of whom purchase large quantities of coffee, plus Djibouti

and Saudi Arabia. In the past, Ethiopias imports came mostly from Europe, especially Italy and Germany, and from India. By 2002, China had become a major source of imports, along with Italy and India, but Saudi Arabia, supplying fuel and refined petroleum products, is by far the largest supplier, providing nearly 29 percent of total imports in terms of value, followed by 11Library of Congress Federal Research Division Country Profile: Ethiopia, April 2005 China and Italy at 6 percent each and India at 5 percent. Since about 2001, Sudan has begun to

supply small volumes of petroleum. In the decade after the return to civilian rule in 1991, Ethiopia established new relationships with international financial institutions, securing funding from the World Bank for economic recovery and reconstruction and implementing structural adjustment programs with the International Monetary Fund (IMF). After slackened funding during the war with Eritrea from 1998 to 2000, the IMF and World Bank resumed assistance aimed broadly at poverty reduction and financial

reform, with aid disbursements tied to defined benchmarks. In 2002 the government produced a five-year framework to guide economic development, reform, and poverty reduction that received US$3.6 billion in support from the international donor institutions for the period from mid-2002 to mid-2005. Under these programs, Ethiopia has made substantial progress in shifting expenditures from defense to social and economic sectors and in reforming its banking system, and the government has taken steps to deal with poverty. Important hurdles remain, however, in

achieving further financial reforms and fostering sustainable economic growth, and progress to date has depended on large infusions of international funding to cover huge budget deficits.