IMF approves $261 million disbursement to Ethiopia under credit facility

The International Monetary Fund’s Executive Board has completed the fourth review of Ethiopia’s 48-month Extended Credit Facility (ECF), clearing the way for an immediate disbursement of about US$261 million to help meet the country’s balance-of-payments and fiscal financing needs.

The latest tranche brings total disbursements under the program to US$2.18 billion since its approval in July 2024, when the IMF endorsed a financing package worth SDR 2.556 billion (approximately US$3.4 billion) to support Ethiopia’s “Homegrown Economic Reform Agenda.”

The IMF said Ethiopia’s program performance remains broadly on track, with all quantitative performance criteria met and most indicative targets achieved. Authorities have introduced a new rule limiting foreign-exchange intervention to auctions, while revenue mobilization and export earnings have recorded “strong gains. “Inflation has continued to ease, supported by tight monetary policy, the Fund said.

However, the IMF noted some slippages, including the adoption of a federal budget that deviated from agreed program parameters and “delays” in publishing audited financial statements for Ethiopian Investment Holdings. The government has pledged corrective measures to address these shortcomings and safeguard fiscal sustainability.

IMF Deputy Managing Director Nigel Clarke welcomed Ethiopia’s progress, citing reforms aimed at modernizing monetary policy, strengthening the foreign-exchange market, and broadening the tax base. He emphasized the need to sustain reform momentum to consolidate recent gains, reduce poverty, and restore debt sustainability.

Ethiopia’s engagement with the IMF comes as the country continues negotiations to restructure its debt following its 2023 default on a US$1 billion Eurobond, its first sovereign default. The missed coupon payment underlines the severe fiscal pressures stemming from years of conflict, pandemic-related disruptions, and elevated inflation. Since then, Ethiopia has been seeking debt relief under the G20 Common Framework, engaging both bilateral and private creditors to stabilize the economy and rebuild investor confidence.

Earlier this month, Ethiopia reached a tentative agreement with a committee representing a significant share of Eurobond holders. The deal, which is still subject to final approval, aims to ease repayment terms and extend maturities, providing the government with fiscal breathing room to advance its reform agenda. The breakthrough followed earlier failed negotiations. In parallel, the government has been negotiating with bilateral creditors, including China, to ensure consistency across restructuring agreements.