The International Monetary Fund (IMF) Executive Board has completed the fifth review of Ethiopia’s 48-month Extended Credit Facility (ECF) arrangement, approving an immediate disbursement of approximately US$464 million (SDR 342.05 million) to support the country’s balance of payments and fiscal financing needs.
The latest approval brings total IMF disbursements under the program to about US$2.647 billion since the facility was approved in July 2024.
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The IMF also agreed to rephase around US$200 million under the program, allowing Ethiopia to access funds earlier to help address financing pressures arising from the ongoing war in the Middle East, particularly the sharp increase in imported fuel prices.
According to the IMF, Ethiopia’s reform program remains broadly on track, with the government meeting all quantitative performance criteria and most indicative targets under the Fund-supported program.
The Fund said Ethiopia has continued to record strong macroeconomic performance despite a challenging external environment. Export growth, improved tax revenue collection, and rising foreign exchange reserves were highlighted as evidence that the country’s economic reforms are delivering results.
The IMF noted that the National Bank of Ethiopia (NBE) has continued implementing measures to improve the functioning of the foreign exchange market. These include partially easing exchange restrictions, expanding the interbank foreign exchange market, enforcing net open foreign exchange position limits, and promoting greater competition among banks.
The Fund said maintaining a tight monetary policy remains appropriate to contain inflation and noted that the central bank should be prepared to tighten policy further if inflationary pressures intensify.
On the fiscal front, the IMF praised Ethiopia’s strong revenue performance and prudent expenditure management. It encouraged the government to continue strengthening tax administration, improving fiscal transparency, and gradually phasing out fuel subsidies while protecting vulnerable households.
The Executive Board also acknowledged continued progress on Ethiopia’s external debt restructuring. The IMF noted that the government has signed several bilateral agreements with official creditors, advanced negotiations with commercial creditors, and reached an agreement in principle with Eurobond holders.
Following the Board meeting, IMF Deputy Managing Director and Acting Chair Nigel Clarke said Ethiopia has continued to advance its Homegrown Economic Reform Agenda despite a difficult global environment.
He emphasized that further reforms to deepen the foreign exchange market, modernize monetary policy, strengthen financial sector oversight, improve central bank governance, and complete debt restructuring will be essential to sustaining macroeconomic stability and supporting long-term private sector-led growth.
Ethiopia’s US$3.4 billion Extended Credit Facility, approved in July 2024, is designed to support the country’s Homegrown Economic Reform Agenda by addressing macroeconomic imbalances, restoring external stability, and laying the foundation for sustainable economic growth.
