The International Monetary Fund (IMF) and the Ethiopian government have reached a staff-level agreement on economic policies to conclude the fifth review of the country’s economic program. Once approved by the IMF Executive Board, the agreement will grant Ethiopia access to approximately $468 million in new financing. This tranche will bring total IMF disbursements under the four-year, $3.4 billion Extended Credit Facility (ECF) arrangement to about $2.65 billion.
An IMF mission led by Alvaro Piris conducted discussions in Addis Ababa and virtually to assess the progress of Ethiopia’s Homegrown Economic Reform Agenda. The delegation held high-level meetings with key economic leaders, including Finance Minister Ahmed Shide and National Bank of Ethiopia Governor Eyob Tekalign. The fund noted that the staff-level agreement remains subject to approval by IMF management and its executive board in the coming weeks.
According to the IMF statement, Ethiopia demonstrated favorable macroeconomic outcomes through early 2026, driven by consistent policy implementation. Notable improvements were recorded in key economic performance areas, including output indicators, export performance, foreign exchange reserves, and domestic government revenue. Concurrently, consumer price inflation showed a steady decline prior to recent external pressures.
However, the international financial institution highlighted that the outbreak of war in the Middle East has introduced significant external shocks to the domestic economy. The conflict has disrupted international trade routes, leading to temporary fuel shortages and sharp price hikes for essential imports such as fuel and fertilizer. Despite these challenges, the IMF observed that overall economic activity remains robust with modest initial impacts on output growth.
To maintain positive macroeconomic momentum, the IMF recommended that the Ethiopian government sustain a tight monetary policy stance to anchor inflation expectations. The fund also emphasized the importance of enhancing the transparency and efficiency of the foreign exchange market to support external economic adjustments. Additionally, the IMF underscored that strengthening domestic revenue mobilization and prudent spending remain crucial to safeguarding fiscal sustainability.
The economic review coincides with Ethiopia’s ongoing efforts to secure a comprehensive external debt treatment under the G20 Common Framework. The IMF reported that debt restructuring negotiations with official creditors are progressing in alignment with expectations, while separate discussions with private bondholders continue. Successfully concluding these debt talks is considered essential for restoring long-term debt sustainability and unlocking further private sector-led growth.