The International Monetary Fund approved a $261 million disbursement to Ethiopia two weeks ago following the fourth review under its 48-month Extended Credit Facility (ECF) arrangement. The release brought total payouts under the roughly $3.4 billion program, to about $2.183 billion. While the review made public over the past few days praised Ethiopia’s strong macroeconomic performance, it also highlighted slippage on two structural benchmarks, including fiscal deviations and delays in publishing consolidated financial statements for Ethiopian Investment Holdings (EIH), the country’s sovereign wealth fund.
The IMF pointed to a series of positive economic developments. Ethiopia’s GDP growth has exceeded expectations, with projections of 9.2% for 2024/25 and 9.3% for 2025/26. Exports have surged buoyed by historic prices for coffee and gold, revenue collection has improved, and foreign reserves reached 1.9 months of import cover in 2024/25, which is a significant increase for the central bank which could cover just three weeks of imports a year prior. Inflation, which averaged 26.6% in 2023/24, eased to 16.0% in 2024/25 and is expected to fall further to 11.9% in 2025/26. The IMF attributed these outcomes to a combination of reforms, including liberalization in the foreign exchange market, tighter monetary policy, strengthened revenue mobilization, and enhanced financial sector oversight.
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