IMF Approves $261 Million for Ethiopia Reforms, Debt Recovery Key

IMF approves $261 million disbursement after completing Ethiopia’s fourth ECF review Funds support macroeconomic reforms and a shift toward private sector-led growth Total IMF disbursements under the program reach about $2.18 billion The International Monetary Fund has approved a disbursement of about $261 million to Ethiopia after completing the fourth review of the country’s program under the Extended Credit Facility, the institution said in a Jan. 16 statement. The funds will support the authorities’ Homegrown Economic Reform program, which aims to correct macroeconomic imbalances and lay the groundwork for growth led by the private sector. The IMF said overall program performance has largely met commitments, even though government contributions to targeted social safety nets fell short of the set objective. All quantitative performance criteria and most indicative targets were met, the Fund added. It also introduced a new quantitative performance criterion setting a zero limit on foreign exchange market interventions, except through auctions. Ethiopia, Africa’s second most populous country, recorded economic growth estimated at 9.2% in 2024/2025, according to the IMF. The economy has been strained in recent years by the war in Ukraine, the conflict in Tigray, recurring droughts, and persistent macroeconomic imbalances, which led to a debt default in 2023. External debt stood at an estimated $28.9 billion in 2024, the IMF said, while the World Bank reported a deterioration in living standards amid double-digit inflation. The government continues efforts to restore debt sustainability and secure adequate debt treatment. In July 2025, it reached an agreement with official creditors to restructure $8.4 billion of debt, a move expected to free more than $3.5 billion in fiscal space for essential public investment, according to government data. The IMF said progress on debt treatment will help address Ethiopia’s financing needs. With the latest disbursement, total IMF support under the current arrangement amounts to about $2.18 billion.