The International Monetary Fund (IMF) has approved the immediate disbursement of approximately $261 million to Ethiopia, following the completion of the fourth review of the country’s Extended Credit Facility (ECF). This brings the total funding released under the four-year, $3.4 billion support program to about $2.183 billion.
The program supports Ethiopia’s Homegrown Economic Reform Agenda, which aims to address macroeconomic imbalances and establish a foundation for private sector-led growth. In its review, the IMF stated that Ethiopia’s performance was broadly in line with program commitments, with all quantitative targets and most indicative goals met.
The IMF highlighted several key areas of progress and ongoing priorities. It endorsed maintaining a tight monetary policy to sustain the recent decline in inflation and welcomed ongoing steps to improve the functioning of the foreign exchange market, including new rules limiting central bank intervention to auctions.
On fiscal policy, the Fund noted strong revenue mobilization and positive tax reforms, while emphasizing the continued need for prudent spending control and efforts to broaden the tax base. It also stressed the importance of phasing out fuel subsidies to rebuild fiscal buffers, while safeguarding social protection spending.
Significant progress was noted on debt restructuring negotiations under the Common Framework, with the recent agreement with official creditors being a welcome step. The IMF stated that securing a final debt treatment is crucial to restoring debt sustainability.
In a statement, IMF Deputy Managing Director Nigel Clarke said the authorities are “making progress in advancing their economic reform agenda,” with measures showing “encouraging results.” He emphasized that “maintaining the reform momentum remains key to the promising macroeconomic outlook.”
The statement also underscored the importance of finalizing governance reforms at the National Bank of Ethiopia to ensure its autonomy, as well as continued efforts to strengthen financial sector oversight.
The disbursement will help Ethiopia meet its balance of payments and fiscal financing needs as it continues its multi-year reform program.
