IMF Executive Board to Review Ethiopia’s $3.4 Billion Program This Summer Amid Economic Reform Push











Addis Ababa, Ethiopia – The International Monetary Fund (IMF) is expected to hold a crucial Executive Board meeting this summer to review the third installment of Ethiopia’s $3.4 billion Extended Credit Facility (ECF) and Extended Fund Facility (EFF) program, according to IMF spokesperson Julie Kozack. The meeting could unlock the disbursement of around $265 million, offering the Ethiopian government a financial lifeline as it navigates complex macroeconomic reforms, restructuring efforts, and a fragile post-conflict recovery.

Background: A Program Anchored in Reform

In December 2019, the IMF approved the $3.4 billion blended ECF/EFF arrangement for Ethiopia to support wide-ranging structural reforms, stabilize the macroeconomic environment, and reduce debt vulnerabilities. While the initial momentum was disrupted by the COVID-19 pandemic and the outbreak of civil conflict in Tigray, Ethiopia resumed reform efforts in late 2022. These included steps to liberalize the exchange rate regime, curb inflation, improve tax administration, and begin restructuring external debt under the G20 Common Framework.

The third review, anticipated since early 2024, comes at a critical juncture. Ethiopia’s economy has shown signs of resilience, with projected real GDP growth of 6.1% in 2025, according to the IMF’s latest World Economic Outlook. However, mounting debt service obligations, double-digit inflation, a persistent foreign currency shortage, and high unemployment—particularly among the youth—remain pressing challenges.

Delayed Staff-Level Agreement Signals Complex Negotiations

According to Julie Kozack, IMF staff concluded their assessment in mid-April. Ethiopian officials had expressed optimism for a swift staff-level agreement, but no such announcement has yet materialized. Analysts suggest that the delay may be due to ongoing technical discussions around debt sustainability, exchange rate alignment, and progress on fiscal consolidation.

The IMF has historically emphasized the need for Ethiopia to adopt a more flexible exchange rate to address external imbalances, reduce the black-market premium, and rebuild foreign exchange reserves. However, liberalizing the birr risks fueling inflation and social unrest, especially in an already volatile political environment.

Negotiations have also been complicated by the slow pace of Ethiopia’s engagement with private and bilateral creditors. While the government secured a debt service suspension agreement with China in 2023, talks with other official creditors under the G20 Common Framework have not yet yielded a comprehensive restructuring deal—an important precondition for unlocking IMF resources.

What’s at Stake: $265 Million and Policy Credibility

Should the IMF Executive Board approve the third review—expected tentatively in June—it would release about $265 million in funding. This disbursement would be crucial for easing balance-of-payments pressures and restoring investor confidence in Ethiopia’s economic reform agenda.

More importantly, it would reaffirm Ethiopia’s commitment to its program targets and policy reforms. The IMF’s endorsement is widely viewed by multilateral lenders and investors as a signal of macroeconomic discipline. Without it, Ethiopia risks further delays in securing World Bank budget support and attracting much-needed concessional financing from development partners.

Reform Fatigue vs. Reform Imperative

For Prime Minister Abiy Ahmed’s government, the IMF program represents both an opportunity and a political gamble. On one hand, it supports long-term economic transformation—such as digitizing tax systems, improving state-owned enterprise governance, and reducing dependence on state-directed credit. On the other, it requires politically sensitive measures: reducing fuel and food subsidies, floating the currency, and cutting public sector employment growth.

Ethiopian civil society groups and labor unions have voiced concern over the social costs of these reforms. With food inflation hovering above 30% for much of 2024, household purchasing power remains low. Urban unrest in Addis Ababa and regional discontent in Oromia and Amhara have raised alarms about the fragility of the social contract in a reform-intensive environment.

Outlook: Balancing Reform, Recovery, and Risk

Despite the hurdles, Ethiopia’s economic team—led by Finance Minister Ahmed Shide and National Bank Governor Mamo Mihretu—has remained engaged with IMF staff. The eventual approval of the third review could serve as a turning point in re-establishing macroeconomic credibility.

However, the road ahead remains uncertain. The delayed staff-level agreement, unresolved debt talks, and domestic opposition to austerity-style reforms present formidable barriers. Whether Ethiopia can balance reform imperatives with political realities will determine not just the future of the IMF program, but the broader trajectory of its economic recovery.

As the IMF Board convenes in the coming weeks, all eyes will be on Addis Ababa. The decision could shape Ethiopia’s fiscal breathing space, reform momentum, and access to external funding at a moment when the stakes have rarely been higher.