Addis Abeba — The International Monetary Fund (IMF) has approved the immediate release of US$261 million to Ethiopia under its Extended Credit Facility (ECF), following the completion of the fourth review of the country's reform program. The decision, the Fund said, reflects "stronger-than-anticipated macroeconomic outcomes and overall performance broadly in line with program commitments."
In a statement issued on 16 January 2026, the IMF said the Executive Board's decision under the 48-month ECF arrangement will support Ethiopia's balance of payments and fiscal financing needs. The disbursement brings total funding released under the program to approximately US$2.183 billion (SDR 1.6 billion).
The Fund highlighted that recent macroeconomic developments have exceeded expectations, citing improvements in economic growth, inflation, and external buffers. Real GDP growth is projected at 9.3% for the 2025/26 fiscal year, up from 9.2% in 2024/25, while average inflation is expected to decline to 11.9%, compared with 26.6% in 2023/24.
On program implementation, the IMF said all quantitative performance criteria were met. However, it noted that Ethiopia's federal budget for FY25/26 deviated from parameters agreed during the third review, resulting in a missed structural benchmark. The authorities have committed to corrective measures to ensure the fiscal deficit remains sustainable.
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The Fund also pointed to delays in meeting a structural benchmark related to the publication of Ethiopian Investment Holdings' (EIH) financial statements, citing implementation constraints. To strengthen the foreign exchange market, the IMF introduced a new performance criterion setting a zero limit on foreign exchange intervention outside of auctions.
Regarding social spending, the Fund said government contributions to targeted social safety nets fell below program targets, as authorities prioritized absorbing contributions from development partners.
Commenting on monetary and financial sector policies, Nigel Clarke, IMF Deputy Managing Director and Chair of the Executive Board, stressed that maintaining a tight monetary stance remains essential to sustain disinflation. The IMF encouraged a phased exit from the cap on private credit growth to support a transition toward an interest-rate-based monetary policy framework and emphasized the importance of finalizing reforms to the National Bank of Ethiopia's governance to safeguard its autonomy.
On debt sustainability, the IMF welcomed the signing of the Official Creditor Committee Memorandum of Understanding under the Common Framework but noted that final debt treatment is still necessary to restore long-term sustainability.
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The Fund also highlighted the importance of phasing out fuel subsidies to rebuild fiscal buffers and improve spending efficiency. Authorities were advised to avoid non-concessional borrowing, except for financing related to the Koysha dam project.
While describing Ethiopia's macroeconomic outlook as "promising," the IMF emphasized that sustaining reform momentum will be critical to consolidating recent gains and supporting medium-term growth and poverty reduction.
Couple of weeks ago, Addis Standard reported that Ethiopia has reached an agreement in principle with a group of international bondholders on the main financial terms for restructuring its US$1 billion Eurobond that matured in 2024, the Ministry of Finance said.
The ministry added that it believes the agreement aligns with the targets and parameters of Ethiopia's ongoing International Monetary Fund (IMF) program, as well as the principle of comparable treatment applied by the country's Official Creditor Committee (OCC).
According to the statement, the agreed terms have been shared with both the OCC and the IMF for confirmation and non-objection.
Ethiopia is awaiting confirmation from the International Monetary Fund (IMF) and the official creditor committee (OCC) on whether the agreement complies with IMF program targets and restructuring terms under a separate deal with bilateral creditors, the statement said.
In its October 2025 Regional Economic Outlook for Sub-Saharan Africa, the International Monetary Fund (IMF) projected Ethiopia's economy to grow by 7.2% in 2025, maintaining its position among the region's fastest-growing economies.
