The Executive Board of the International Monetary Fund (IMF) has approved a $464 million disbursement to Ethiopia after completing the fifth review under the Extended Credit Facility (ECF). This latest release brings the total funding received by the country under the current arrangement to $2.647 billion, which is intended to help the nation stabilize its balance of payments and meet its fiscal budgetary requirements.
While Ethiopia’s overall macroeconomic performance remains resilient, ongoing geopolitical tensions in the Middle East have exerted external pressure on the domestic economy, particularly through rising fuel costs. To mitigate these immediate financial strains, the IMF agreed to rephase the program, front-loading approximately $200 million of future scheduled financing to support the nation’s immediate economic stabilization efforts.
The IMF Board commended the positive outcomes of Ethiopia’s Homegrown Economic Reform (HGER) agenda, highlighting improvements in export growth, enhanced tax revenue collection, and increased foreign exchange reserves. Additionally, the IMF statement acknowledged steady advancements in the government’s ongoing debt restructuring negotiations with official external creditors and Eurobond holders.
IMF Deputy Managing Director Nigel Clarke endorsed the National Bank of Ethiopia’s (NBE) current tight monetary stance, validating it as a necessary measure to curb inflation. However, the Fund cautioned that the central bank must remain prepared to further tighten policies should second-round inflationary pressures emerge, while continuing its ongoing structural reforms to foster competitive and efficient foreign exchange markets.
Looking forward, the Fund recommended the gradual phasing out of subsidies to generate fiscal space for development and social services, provided that vulnerable populations are adequately safeguarded. The IMF also advised the NBE to establish a clear strategy to exit direct participation in the gold market, alongside appointing independent board members and executing a recapitalization plan to strengthen institutional autonomy.