Ethiopia faces renewed inflationary pressures as rising global fuel and fertilizer prices threaten to increase living costs and complicate the country’s economic reform efforts, according to the International Monetary Fund (IMF).

The IMF warns that disruptions in international energy markets could increase Ethiopia’s import bills, raise transportation costs and put further pressure on household purchasing power.

According to the IMF’s October 2026 Regional Economic Outlook Update for Sub-Saharan Africa, global oil prices are projected to average $96 per barrel in 2026 before declining to $87 in 2027. However, continued disruptions to refined petroleum supplies, particularly diesel, could sustain price pressures despite an expected gradual recovery in energy markets.

As Ethiopia relies on imported petroleum products, higher international oil prices could increase foreign exchange demand and raise operating costs across the transportation, agriculture, manufacturing and trade sectors.

Fertilizer prices are also expected to rise significantly. The IMF projects that global fertilizer prices will increase by 26 percent in 2026 compared with 2025, potentially raising farmers’ production costs and contributing to higher food prices in subsequent seasons.

The report cautions that inflationary pressures could persist even if global oil prices begin to decline, as higher energy and agricultural input costs continue to affect domestic markets.

The IMF also highlighted the financial challenges of shielding Ethiopian consumers from international fuel price increases through temporary, differentiated subsidies.

Between February 23 and September 14, 2026, domestic gasoline prices reflected approximately 38 percent of the corresponding increase in international benchmark prices, while diesel prices reflected around 44 percent, excluding the higher commercial diesel tariff, according to preliminary IMF estimates.

These figures measure the extent to which international price increases were passed on to domestic consumers rather than indicating the overall subsidy rate.

The IMF warns that broad-based fuel subsidies can strain government budgets and disproportionately benefit wealthier households. It recommends providing targeted support to vulnerable households and farmers rather than relying heavily on generalized subsidies.

Ethiopia also faces risks from tighter international financing conditions and declining development assistance. The IMF projects that bilateral aid to sub-Saharan Africa will fall by a further 12 percent in 2026, following an estimated decline of about one-quarter in 2025. These figures apply to the region as a whole and do not represent Ethiopia-specific projections.

Meanwhile, climate-related shocks could undermine agricultural production and intensify food price pressures. Rainfall deficits in some areas, combined with excessive rainfall and flooding in others, could disrupt livelihoods, damage infrastructure and affect food supplies.

The IMF calls for stronger climate preparedness, improved emergency financing, more efficient public spending and increased domestic revenue collection.

The report highlights Ethiopia’s challenge of sustaining economic reforms while containing inflation and protecting vulnerable households. Rising international commodity prices and external financing pressures could complicate efforts to achieve macroeconomic stability and preserve resources for long-term development.

The United Nations has allocated an additional $8.5 million from the Central Emergency Response Fund (CERF) to address rapidly growing humanitarian needs in northern Ethiopia. Escalating conflict has displaced civilians and disrupted relief operations across the Tigray, Amhara, Afar, and Benishangul-Gumuz regions.

Announced by Tom Fletcher, UN Under-Secretary-General for Humanitarian Affairs and Emergency Relief Coordinator, this funding is expected to reach over 202,700 people affected by recent and secondary displacement, loss of basic services, and severely restricted humanitarian capacity.

“Escalating conflict and renewed security threats are compounding humanitarian tensions in northern Ethiopia,” Fletcher stated, adding that the funds will enable humanitarian organizations to swiftly deliver shelter, health, food, protection, and water, sanitation, and hygiene (WASH) services.

The allocation covers critical sectors—including WASH, shelter, health, nutrition, and protection—as well as operational and logistics services required to deliver aid. Priority will be given to communities where basic services have been interrupted and relief capacity is insufficient.

Ozonnia Ojielo, the UN Resident and Humanitarian Coordinator in Ethiopia, noted that this additional support “complements the major ongoing efforts and response initiatives already being undertaken by the government and humanitarian partners.”

The funding allocation comes at a time when conditions in northern Ethiopia have sharply worsened due to renewed fighting in late September between Ethiopian federal forces and Tigrayan forces, jeopardizing the peace secured through the November 2022 Pretoria Agreement.

The conflict has disrupted fuel supplies, market operations, and transportation services, restricting access to food and essential commodities for households. Access to aid has been severely limited as telecommunications blackouts, flight suspensions to and from Tigray, and road closures hinder aid delivery and the movement of humanitarian workers.

With this latest allocation, CERF’s total support for Ethiopia in 2026 exceeds $22.5 million. This includes anticipatory action measures aimed at mitigating humanitarian impacts before conditions worsened in areas affected by El Niño-induced drought in the Afar and Amhara regions.

The Central Emergency Response Fund rapidly disburses funding to deliver life-saving relief during humanitarian emergencies, particularly when available resources are insufficient to meet urgent needs. The fund was established to help humanitarian agencies respond swiftly to crises and reach vulnerable populations most in need of assistance.

This new support highlights the scale of unmet needs in Ethiopia, where severe funding shortages continue to limit the reach and continuity of life-saving operations. UNICEF’s humanitarian appeal for Ethiopian children requires a total of $401.5 million, yet it remains 86 percent unfunded.

The Beginnings Fund, a philanthropic initiative backed by the Mohamed bin Zayed Foundation for Humanity, has launched a US$90 million, five-year partnership with the Ethiopian government to improve access to quality maternal and newborn healthcare and reduce preventable deaths across the country.

The partnership, announced in Addis Ababa, aims to strengthen Ethiopia’s maternal and newborn health services through investments in healthcare workers, medical equipment, essential medicines, infrastructure and emergency referral systems.

The programme will cover eight regions and 210 health facilities, focusing on expanding access to affordable, evidence-based interventions designed to improve the quality and timeliness of care for pregnant women, mothers and newborns.

According to the announcement, the investment is intended to support Ethiopia’s national health priorities and complement existing government programmes and donor commitments. Of the total funding, $10 million has already been channelled through Ethiopia’s Reproductive, Maternal, Newborn and Child Health Compact, a government-led mechanism that coordinates domestic and donor financing for maternal, newborn and child health services.

The initiative is expected to contribute to Ethiopia’s efforts to prevent approximately 86,000 maternal and newborn deaths and stillbirths by 2031.

Ethiopia’s Minister of Health, Dr Mekdes Daba, described the partnership as an important investment in the country’s ambition to improve maternal and newborn healthcare and ensure that more women and babies receive the services they need.

Over the next five years, the partnership will focus on recruiting and developing skilled maternal and newborn healthcare professionals, improving the availability of essential medicines and medical equipment, and strengthening health facility infrastructure.

The programme will also support improvements in health data systems and emergency referral services, which are critical to ensuring that women experiencing pregnancy or childbirth complications can receive timely medical attention.

Alice Kang’ethe, chief executive officer of the Beginnings Fund, said the partnership would help direct resources towards areas where they could make the greatest difference.

Working alongside the Ethiopian government and other partners, the fund aims to expand access to quality healthcare for women and newborns regardless of where they live, while supporting lasting improvements in the country’s health system.

Dr Shamma Khalifa Al Mazrouei, director-general of the Mohamed bin Zayed Foundation for Humanity, said the initiative builds on the foundation’s longstanding partnership with Ethiopia and its commitment to improving maternal and newborn health.

The Beginnings Fund is a $525 million philanthropic initiative launched in Abu Dhabi in 2025 to work with African governments to reduce preventable maternal and newborn deaths and stillbirths.

By 2031, the fund aims to expand access to quality healthcare for 34 million mothers and babies across 10 African countries and prevent more than 300,000 avoidable deaths.

Its supporting organisations include the Mohamed bin Zayed Foundation for Humanity, the Children’s Investment Fund Foundation, Delta Philanthropies, the ELMA Foundation and the Gates Foundation.

Ethiopia is the third country, after Kenya and Malawi, to announce a partnership with the fund.

The new investment comes as Ethiopia continues efforts to strengthen its healthcare system and improve access to essential services. The partnership’s success will depend on effective implementation, adequate staffing, the availability of essential supplies and the ability of participating health facilities to deliver timely, high-quality care.

Ministry of Finance (MoF) plans to issue 73.23 billion birr in one-year Treasury Bills (T-Bills) as part of a total 133.97 billion birr issuance programme scheduled for the second quarter of the 2019 EFY, according to the Ministry’s auction calendar covering October 14 to December 23, 2026.

The planned issuance will be conducted through six auctions offering Treasury Bills with maturities of 28, 91, 182 and 364 days. The 364-day securities account for the largest share of the programme, followed by six-month Treasury Bills.

The Ministry’s calendar allocates 42.43 billion birr to 182-day securities, 15.26 billion birr to 91-day bills and 3.05 billion birr to 28-day bills. Together, the 182-day and 364-day securities account for approximately 115.66 billion birr of the total planned issuance.

The auction programme begins on October 14, with a scheduled issuance of 23.39 billion birr. The Ministry plans to offer another 22.55 billion birr on October 28, followed by the largest auction of the period on November 11, when the planned issuance will reach 30.99 billion birr.

The November 25 auction is scheduled to offer 15.51 billion birr, the lowest amount in the six-auction calendar. The programme will continue with an issuance of 21.90 billion birr on December 9 and conclude with 19.63 billion birr on December 23.

One-year Treasury Bills will remain the dominant component of the planned programme. The November 11 auction includes the largest allocation for 364-day securities, at 16.36 billion birr. The October 14 auction is scheduled to offer 12.71 billion birr in one-year bills, while the October 28 auction allocates 12.31 billion birr to the same maturity.

The schedule provides a breakdown of planned issuance by auction date and maturity, offering market participants a forward-looking timetable for the government’s Treasury Bill offerings over the three-month period.

The Ministry of Finance said the auction calendar will be updated at the end of each month on a rolling basis, providing a schedule of Treasury Bill auctions for the subsequent three months.