The funds are intended to ease balance‑of‑payments pressures and support Ethiopia’s reform‑driven budget needs.
The approval comes as Ethiopia continues implementing a wide‑ranging macroeconomic reform package introduced in July 2024. Speaking about the development on Monday, Mered Fikireyohannes, Founder and Chief Executive Officer of Pragma Investment Advisory, said Ethiopia is now 18 months into the programme, which includes major structural shifts such as floating the currency, restructuring domestic and foreign debt, and overhauling monetary policy.
He noted that the full IMF package amounts to $3.4 billion, intended to stabilise the economy and support recovery. The latest disbursement followed the IMF’s satisfaction with Ethiopia’s progress, including negotiations with Eurobond holders and commitments to ongoing reforms.
The IMF’s support comes at a time when Egypt and Sudan have accepted a renewed United States (US) proposal to mediate negotiations with Ethiopia over the longstanding Nile River water dispute linked to the Grand Ethiopian Renaissance Dam (GERD).
Fikireyohannes said the dispute remains deeply rooted: “The tension over the Nile is as old as the pyramids.” While the GERD is now structurally complete, holding around 74 billion cubic metres of water and capable of generating 5 135MW, disagreement persists over technical issues, especially water release during drought years.
He explained that the US push to mediate serves wider geopolitical interests, including efforts to draw Egypt into the Abraham Accords. Ethiopia, however, prefers that negotiations take place under the Nile Basin Commission, which includes all upstream and downstream states, including Kenya, Rwanda, Burundi and Tanzania.
Addressing concerns about possible economic consequences for Egypt and Sudan, Fikireyohannes stressed that the Nile’s flow has not been disrupted, saying: “Sudan gets what it gets; Egypt gets what it gets. The river still flows.” The remaining issue centres on coordinated drought‑season releases, not everyday water availability.
He added that Ethiopia ultimately aims to sell electricity to Sudan and South Sudan under existing power‑purchase agreements, making cooperation in all parties’ interests.
Despite these dynamics, he warned that without agreement on water‑release rules, political tensions may linger: “The missing link is how much water should be dispersed, and when. That is what the Americans are trying to oversee.”
–ChannelAfrica–
