IMF Board Approves $261m Disbursement for Ethiopia After Fourth ECF Review
The Executive Board of the International Monetary Fund (IMF) has completed the fourth review of Ethiopia’s 48-month Extended Credit Facility (ECF) arrangement, paving the way for an immediate disbursement of about US$261 million (SDR 191.7 million).
The latest disbursement brings total IMF support under the programme to about US$2.18 billion, aimed at helping Ethiopia meet its balance of payments and fiscal financing needs.
Ethiopia’s ECF programme, approved on July 29, 2024, amounts to SDR 2.556 billion, equivalent to about US$3.4 billion at the time of approval, representing 850% of the country’s quota. The arrangement is designed to support the government’s Homegrown Economic Reform Agenda (HGER) to address macroeconomic imbalances and lay the foundations for private sector-led growth.
Programme Performance Largely On Track
According to the IMF, overall programme performance has been broadly in line with commitments. All quantitative performance criteria and most indicative targets were met during the review period.
A new quantitative performance criterion has been introduced, setting a zero limit on foreign exchange intervention outside auctions. However, the government’s contribution to targeted social safety nets fell below programme targets, as authorities prioritised the absorption of development partner contributions.
While most structural benchmarks were achieved, the IMF noted that the Federal Budget for FY2025/26 deviated from parameters agreed at the third review, resulting in a missed benchmark. Authorities have committed to corrective measures to ensure the fiscal deficit remains financeable and expenditure stays aligned with programme objectives.
The structural benchmark on the publication of Ethiopian Investment Holdings’ financial statements was also not met, due to implementation delays.
Monetary and FX Policy
The Fund said maintaining a tight monetary policy stance remains appropriate to anchor inflation expectations and support further disinflation, while reforms to enhance foreign exchange market functioning are ongoing.
Revenue mobilisation was described as strong, with recent tax policy reforms expected to broaden the tax base and raise revenue potential. The IMF stressed that continued reforms in tax and customs administration will be critical to ensuring a stable and sustainable revenue framework that supports private investment.
Debt Sustainability Efforts
The IMF welcomed progress made on debt restructuring negotiations under the G20 Common Framework, including the signing of the Official Creditor Committee Memorandum of Understanding. Discussions with private external creditors are continuing, with financing assurances and adjustment efforts deemed consistent with IMF policy requirements.
IMF Commends Reform Momentum
Commenting on the decision, IMF Deputy Managing Director and Acting Chair of the Executive Board, Mr Nigel Clarke, said Ethiopia continues to make progress in advancing its ECF-supported reform agenda, with better-than-anticipated macroeconomic outcomes.
He commended ongoing efforts by the National Bank of Ethiopia to strengthen FX market operations, including limiting interventions to auctions and publishing auction guidelines aligned with international best practice.
Mr Clarke also emphasised the importance of sustaining tight monetary conditions, prudent expenditure control, and continued domestic revenue mobilisation to safeguard fiscal sustainability, while underscoring the need to secure a debt treatment to restore debt sustainability and meet financing needs.
He added that finalising governance reforms at the central bank and strengthening financial sector oversight would be critical to maintaining financial stability and ensuring the effective execution of monetary policy.
