IMF Completes Fifth Ethiopia Review, Unlocks $464 Million in Immediate Funding

ADDIS ABABA, Ethiopia — The International Monetary Fund (IMF) has officially completed its fifth review of Ethiopia’s Extended Credit Facility (ECF) arrangement. The decision unlocks an immediate disbursement of approximately $464 million USD, bringing the total drawdowns under the country’s economic reform programme to roughly $2.647 billion USD.

In an unexpected move, the IMF Executive Board also rephased about $200 million USD of future programme resources forward. This early funding injection is specifically designed to act as a buffer against the escalating conflict in the Middle East, which has driven up imported fuel costs and delivered a “substantial external shock” to the East African nation.

Economic Growth Hits 9.2%, But Risks Loom Large

Data released in the IMF’s selected economic indicators table paints a picture of an ambitious reform agenda that is broadly on track, though increasingly uneven.

• GDP Growth: Real GDP growth held steady at a robust 9.2 percent for the 2024/25 fiscal year and is projected to maintain that exact pace through FY2025/26.
• Inflation Sticky: The disinflation process appears to be losing momentum. The IMF expects inflation to tick back up to 12.3 percent in FY2026/27, keeping it well outside the Fund’s preferred medium-term target range.
• Credit Surge: Most striking is a projected 55.9 percent expansion in credit to the private sector and state-owned enterprises (SOEs) for FY2025/26. This is a massive U-turn from the 9.7 percent contraction recorded just a year prior. The IMF explicitly noted that this rapid credit growth requires “close monitoring” to avoid financial stability risks.

The Debt Burden and Restructuring Hurdles

The country’s fiscal landscape remains complex. Ethiopia’s public and publicly guaranteed debt spiked dramatically from 35.5 percent of GDP in FY2023/24 to 50.5 percent in FY2024/25. This 15-percentage-point jump in a single year was largely driven by the recapitalization of the Commercial Bank of Ethiopia (CBE) and the reclassification of several state liabilities.

While the IMF projects this debt ratio to taper off to 45.3 percent in FY2025/26, that decline hinges entirely on finalizing negotiations with external lenders.

“Several bilateral agreements with official creditors have been signed and an agreement-in-principle has been reached with Eurobond holders, but the process is not yet concluded,” the IMF stated. Until these debt restructurings are finalized, the financing assurances keeping the IMF programme afloat remain provisional.

Foreign Reserves Show Modest Signs of Life

Ethiopia’s notoriously tight foreign exchange reserves are showing slow, incremental improvement but remain in a vulnerable position.

While 2.1 months of import cover is a massive leap forward from the dire 0.7 months recorded two years ago, it still sits comfortably below the three-month threshold globally recognized as the minimum safe buffer for an import-dependent economy.