Ethiopia Secures IMF Staff-Level Agreement, Paving Way for $260 Million Disbursement











Addis Ababa, Ethiopia – May 30, 2025 — The International Monetary Fund (IMF) announced on Friday that it has reached a staff-level agreement with Ethiopia on the third review of the country’s $3.4 billion loan program. The agreement, once formally approved by the IMF Executive Board, will unlock a further $260 million in funding for the Horn of Africa nation.

The development marks a significant milestone in Ethiopia’s multi-year reform agenda, aimed at stabilizing its macroeconomic framework, modernizing its monetary policy, and addressing a lingering debt burden exacerbated by conflict, drought, and global economic shocks.

“The [Ethiopian] authorities’ policy actions in the first year of the program have yielded strong results,” the IMF said in a statement. “The transition to a flexible exchange rate regime has proceeded with little disruption.”

The Fund commended Ethiopia’s performance across key economic indicators, noting that inflation, goods exports, and international reserves have all outperformed previous forecasts. These achievements are seen as critical steps toward restoring investor confidence and rebuilding external buffers.

Reform Progress and Economic Impact

At the heart of Ethiopia’s program with the IMF is a sweeping reform agenda that includes moving away from a heavily managed exchange rate, improving public financial management, and deepening structural reforms to foster inclusive growth.

The IMF highlighted the smooth rollout of the country’s flexible exchange rate regime, which had long been recommended by economists as a tool to correct external imbalances and enhance competitiveness. The reform is already bearing fruit, with inflation trending downward and foreign exchange shortages easing, according to government and IMF data.

Additionally, the country’s export sector has shown renewed momentum, and gross international reserves have improved, suggesting enhanced resilience in the face of global uncertainties.

What’s Next?

The $260 million disbursement—pending Executive Board approval—will bring the total disbursed amount under the current Extended Credit Facility (ECF) and Extended Fund Facility (EFF) programs closer to $1 billion. This funding is expected to support Ethiopia’s balance of payments and fiscal needs while also reinforcing the government’s ongoing reform efforts.

The IMF noted that it will continue to work closely with Ethiopian authorities to maintain reform momentum and ensure that program objectives—including debt sustainability and poverty reduction—are met.

Broader Implications

Ethiopia’s ability to stay on course with IMF-supported reforms could signal renewed international confidence in its economic trajectory. Analysts note that unlocking IMF tranches not only provides direct budgetary support but also catalyzes additional funding from multilateral and bilateral donors.

With this third review signaling strong progress, the Ethiopian government is likely to continue leveraging international partnerships to stabilize its economy, manage debt vulnerabilities, and lay the groundwork for sustainable and inclusive development.

Tags: #Ethiopia #IMF #EconomicReform #ExchangeRate #Inflation #Exports #Macroeconomics #AfricaEconomy #DevelopmentFinance #AddisAbaba #InternationalReserves #LoanDisbursement