Second Sustainable and Inclusive Growth Development Policy Operation

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The Project Development Operations (DPO) of the DPO series are to support the Government of Ethiopia’s efforts to: (i) advance financial sector restructuring, trade, and investment; (ii) promote fiscal sustainability and transparency; and (iii) enhance social resilience and climate action. Under Pillar 1, reforms strengthen financial stability and intermediation by operationalizing bank resolution frameworks and integrating the national instant payment system, while liberalizing trade through foreign entry into trade sectors and adoption of WTO-aligned customs valuation and trade facilitation procedures. Under Pillar 2, actions bolster fiscal sustainability by modernizing property taxation, enhancing excise collection and audit efficiency, and reducing tax expenditures, while increasing transparency through new accounting institutions, procurement disclosure, and a framework to ensure periodic electricity tariff reviews and adjustments based on energy sector revenue requirements, integrated sector planning, and competitive bidding for public-private partnerships. Under Pillar 3, the program improves social resilience and climate action by expanding digital delivery of safety nets, enhancing equity in education and health financing, enabling pluralistic and market-oriented agricultural service provision, and establishing a legal framework for benefit-sharing under Payments for Ecosystem Services.