The International Monetary Fund on Thursday approved the release of 261 million US dollars to Ethiopia after completing the fourth review of the country’s 48-month Extended Credit Facility programme, bringing total disbursements under the arrangement to about 2.183 billion US dollars.
The IMF said the financing would help Ethiopia meet its balance of payments and fiscal financing needs as the government continues to implement its Homegrown Economic Reform Agenda.
The four-year programme, approved in July 2024, totals SDR 2.556 billion, equivalent to about 3.4 billion US dollars at the time, and is aimed at addressing macroeconomic imbalances and supporting private sector-led growth.
The Fund said overall programme performance was broadly in line with commitments, with all quantitative performance criteria and most indicative targets met.
The IMF said Ethiopia had committed to measures to ensure the fiscal deficit remains financeable and that spending stays aligned with programme objectives.
The Fund said maintaining a tight monetary stance remains appropriate to anchor inflation expectations and support further declines in inflation, while steps to improve the functioning of the foreign exchange market were welcomed.
Real GDP growth is projected to reach nine point two percent in 2024/25, up from eight point one percent the previous year, while inflation is expected to fall to sixteen percent, from twenty-six point six percent, according to IMF projections.
The Fund urged continued restraint in public spending, despite strong pressure to increase expenditure, and said phasing out fuel subsidies was important to rebuild fiscal buffers and improve spending efficiency while protecting social protection programmes.
Public debt is projected to rise to fifty point three percent of GDP in 2024/25 before declining gradually over the medium term as fiscal consolidation and debt restructuring take effect.
Ethiopia continues negotiations with creditors under the Common Framework. The IMF welcomed the signing of a Memorandum of Understanding with official creditors and said discussions with private external creditors are ongoing.
Nigel Clarke, the IMF’s Deputy Managing Director, said Ethiopia had made progress in advancing its reform agenda, citing improvements in the foreign exchange market, revenue mobilisation and financial regulation.
“Maintaining the reform momentum remains key to the promising macroeconomic outlook,” he said.