The decision by the IMF Executive Board brings total disbursements under the 48-month arrangement to about $2.183 billion and is intended to help Ethiopia meet balance of payments and fiscal financing needs. The broader programme, approved on July 24, 2024, is valued at about $3.4 billion and supports the government’s Homegrown Economic Reform Agenda aimed at correcting macroeconomic imbalances and promoting private sector-led growth.
The Fund noted that overall programme performance remained broadly in line with commitments. All quantitative performance criteria and most indicative targets were met, while several structural benchmarks were achieved. A new requirement setting a zero limit on foreign exchange intervention outside formal auctions has been introduced.
However, the Federal Budget for the 2025/26 financial year deviated from parameters agreed during the previous review, and publication of financial statements by Ethiopian Investment Holdings was delayed. Authorities have pledged corrective measures to ensure the fiscal deficit remains financeable and consistent with programme objectives.
IMF Deputy Managing Director Nigel Clarke welcomed progress in modernising monetary policy and strengthening the foreign exchange market. Continued tight monetary conditions were necessary to anchor inflation expectations and support further declines in price growth, Clarke noted.
Revenue collection has improved following recent tax reforms, but the Fund emphasised the need for deeper changes in tax and customs administration to broaden the base and create a stable environment for investment. Prudence in public spending and development of domestic financing sources were also highlighted as essential for fiscal sustainability.
The IMF further welcomed advances in Ethiopia’s debt restructuring under the Common Framework, including the signing of a memorandum with official creditors. Talks with private creditors are continuing, and the Fund stressed that avoiding non-concessional borrowing would be crucial to containing debt vulnerabilities.
Strengthening financial sector oversight and finalising governance reforms at the National Bank of Ethiopia were identified as priorities to safeguard stability and support long-term growth.
–IMF/ChannelAfrica–
