Ethiopia is poised to receive $261 million from the International Monetary Fund (IMF), signalling stronger reform momentum and improving macroeconomic conditions across the nation.
In a statement issued on Wednesday, the IMF said a staff-level agreement has been reached to unlock the facility following a three-day consultation with Ethiopian officials. The agreement will be considered by the Fund’s Executive Board in the coming weeks.
If approved, the fourth review will release $261 million (SDR191.7 million), bringing total disbursements under the existing programme to $2.1 billion.
The allocation forms part of Ethiopia’s $3.4 billion Extended Credit Facility (ECF), approved in July 2024 to help restore macroeconomic stability after years of foreign-exchange shortages, and heavy fiscal pressures.
The review marks a notable turnaround for the Horn of Africai, which only regained access to IMF financing last year after a long suspension triggered by stalled reforms and a conflict that erupted in 2020.
The civil war, which ended in 2022, left the economy with severe foreign-currency shortages, elevated inflation and weak investor confidence.
As conditions worsened, Ethiopia defaulted on its external obligations in December 2023, becoming the third African country in as many years to do so.
Ethiopia’s road to recovery
The IMF says the renewed reform drive — anchored on Ethiopia’s Homegrown Economic Reform (HGER) agenda — has significantly stabilised the economy.
Available indicators point to faster growth since mid-2024, driven by rising gold output, higher electricity generation and stronger agricultural production.
Bloomberg data show that gold exports reached $3.5 billion in the last fiscal year, marking a sharp improvement from $409 million a year earlier and overtaking coffee for the first time in decades.
Inflation has continued to ease, falling to 10.9% in November 2025, the lowest reading since February 2019 and the sixth consecutive month of disinflation.
The National Bank of Ethiopia has also overhauled the foreign-exchange framework, allowing commercial lenders to trade FX more freely and shifting toward a market-determined exchange rate.
These measures, alongside improved export earnings, have helped narrow the gap between official and parallel market rates, easing chronic currency pressures.
The IMF expects continued reform momentum to be critical for sustaining the recovery.
“Prudent expenditure management and sustained resource mobilisation will be essential for fiscal sustainability,” it said, adding that improving the business environment will be key to encouraging private investment.
Debt restructuring moves forward
The East African nation has also advanced its debt restructuring effort.
A Memorandum of Understanding outlining key terms between the government and the Official Creditor Committee under the G20 Common Framework was signed in July 2025. The next step is to conclude bilateral agreements with individual lenders, a critical milestone for restoring long-term debt sustainability.
If the IMF board gives its approval, the next disbursement will take Ethiopia one step closer to stabilising its economy and rebuilding confidence after years of turbulence.
