Ethiopia is set to receive approximately $468 million in additional financing after the International Monetary Fund (IMF) reached a staff-level agreement with the government on the fifth review of the country’s Extended Credit Facility (ECF) program.
The agreement, announced on Wednesday, marks another milestone in Ethiopia’s ongoing economic reform agenda and, once approved by the IMF Executive Board, will bring total disbursements under the four-year $3.4 billion program to about $2.65 billion.
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The IMF said Ethiopia’s reform efforts have continued to deliver positive results despite facing a major external shock from the war in the Middle East. According to the Fund, economic indicators including exports, foreign exchange reserves, government revenues, and inflation trends continued to improve through the early months of 2026.
However, the conflict in the Middle East disrupted trade flows and triggered sharp increases in the prices of imported fuel and fertilizer, creating temporary fuel shortages and adding pressure to the economy. Even so, the IMF noted that the impact on economic growth and consumer prices has so far remained relatively modest, with economic activity continuing to show resilience.
“Output indicators, exports, reserves, and government revenue all continued to improve through early 2026, alongside declines in inflation,” the IMF said in a statement following discussions between its staff team and Ethiopian authorities.
The Fund nevertheless warned that risks to the outlook have increased as global uncertainty rises and commodity prices remain volatile. While the current shock is expected to have only a moderate impact if it proves temporary, higher import costs and an uncertain global environment will require careful policy management in the months ahead.
To preserve macroeconomic stability, the IMF emphasized the need for continued policy discipline. It said maintaining a tight monetary stance will be important to keep inflation expectations anchored, while further efforts to improve the transparency and efficiency of the foreign exchange market will support external adjustment. The Fund also highlighted the importance of strengthening domestic revenue collection and managing public spending prudently as new fiscal pressures emerge.
Beyond stabilization efforts, the IMF stressed that deeper structural reforms will be critical to unlocking stronger private sector-led growth. Improving the business environment, strengthening the resilience of the financial sector, and advancing market-oriented reforms remain among the government’s key priorities under the Homegrown Economic Reform Agenda.
The review also comes as Ethiopia continues negotiations with creditors to restore debt sustainability. The IMF reported that discussions with official creditors are progressing broadly as expected, while talks with international bondholders remain ongoing.
The staff-level agreement follows an IMF mission led by Alvaro Piris, which visited Addis Ababa between May 6 and May 20 before continuing discussions virtually. The mission held meetings with Finance Minister Ahmed Shide, National Bank of Ethiopia Governor Eyob Tekalign, senior government officials, private sector representatives, and development partners.
The agreement is now subject to approval by IMF management and the IMF Executive Board in the coming weeks. If approved, Ethiopia will gain access to about SDR 342.05 million, equivalent to roughly $468 million, providing further support for the country’s ambitious economic reform program amid an increasingly uncertain global environment.
