(Bloomberg) -- The U.S. imposed “wide-ranging” economic sanctions against Ethiopia to push the African nation led by a Nobel laureate to end violence in Tigray that has killed thousands of people and displaced hundreds of thousands more.

Visas to government and military officials from Ethiopia and its neighbor Eritrea, which is also involved in the violence in Tigray, will be restricted, U.S. Secretary of State Antony Blinken said in a statement. The action sets back relations between two longtime allies in the fight against Islamist extremism in the Horn of Africa.

The U.S. sanctions will mainly affect financing to support Ethiopia’s budget, and will include a request that the World Bank and the International Monetary Fund withhold funding, people familiar with the matter said on Saturday. Ethiopia, led by Prime Minister Abiy Ahmed, is the biggest recipient in Africa of U.S. foreign aid, receiving about $1 billion last year.

The U.S. “has deepening concerns about the ongoing crisis in Ethiopia’s Tigray region,” Blinken said in the statement. “Despite significant diplomatic engagement, the parties to the conflict in Tigray have taken no meaningful steps to end hostilities or pursue a peaceful resolution of the political crisis.”

The penalties are over Abiy’s handling of the war in the Tigray and the involvement of troops from neighboring Eritrea. Earlier this month, Blinken expressed concern about increasing obstacles to humanitarian aid in Tigray and criticized both the Ethiopian and Eritrean authorities for failing to honor pledges to withdraw their forces.

Abiy won the Nobel Peace Prize two years ago for ending a protracted conflict with neighboring Eritrea.

Violence engulfed Tigray in November, when federal troops attacked soldiers loyal to the state’s dissident ruling party. The unrest has left thousands of people dead and displaced hundreds of thousands more.

The U.S. measures follow a decision in March by the European Union to impose sanctions on Eritrea’s National Security Agency, citing alleged human-rights violations. A further list of more targeted sanctions aimed at Ethiopia is also being considered in Brussels, two diplomats with knowledge of the matter said.

Ethiopia signed a $907 million funding agreement with the World Bank last month. In February, the government and the IMF reached a staff level agreement for the first and second review of extended credit facilities.

The IMF’s board is awaiting “financing assurances from creditors for a debt treatment” that is required before the reviews are presented to the fund’s executive board for approval, an IMF official said in an emailed response to questions.

The World Bank didn’t immediately respond to an emailed request for comment.

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