IMF Executive Board Completes the Fourth Review under the Extended Credit Facility Arrangement for Ethiopia
IMF News, January 16, 2026
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- Published: January 16, 2026
Review outcome and disbursement
- The Executive Board completed the fourth review of the 48-month Extended Credit Facility (ECF) for Ethiopia on January 16, 2026.
- The Board’s decision allows for an immediate disbursement of about US$261 million (SDR 191.7 million).
- Total disbursements under the arrangement to date: about US$2.183 billion.
- Original ECF arrangement size at approval (July 29, 2024): SDR 2.556 billion (850 percent of quota) or about US$3.4 billion.
Program performance and reform implementation
- Overall program performance: broadly in line with program commitments.
- All quantitative performance criteria (QPCs) and most indicative targets (ITs) were met.
- A new QPC introduced: a zero limit on foreign exchange (FX) intervention except through auctions.
- Government contribution to targeted social safety nets (indicative target) was lower-than-targeted to prioritize absorption of development partner contributions.
- Most structural benchmarks met; the Federal Budget for FY25/26 deviated from program parameters agreed at the third review (missed structural benchmark).
- The structural benchmark on the publication of Ethiopian Investment Holdings’ (EIH) financial statements was not met due to implementation delays.
- Authorities committed to measures to ensure the fiscal deficit is financeable and expenditures remain consistent with program objectives.
Monetary policy, FX market, and financial sector
- Maintaining a tight monetary stance is appropriate to anchor inflation expectations and support further declines in inflation.
- Authorities are taking steps to enhance the functioning of the foreign exchange market.
- National Bank of Ethiopia (NBE) actions highlighted:
- Publishing FX auction guidelines consistent with international best practice.
- Limiting FX intervention to auctions.
- Developing a plan to bring the Commercial Bank of Ethiopia’s Net Open FX Position within prudential limits.
- Finalization of NBE’s governance reform plan, including appointing new Board members in line with the amended central bank law.
- Recommendations to strengthen markets and transmission:
- Develop the interbank FX market to strengthen banks’ FX risk management and enhance transparency.
- Interbank market and repo market development to support monetary policy transmission.
- Recently-approved increases in reserve requirements to maintain tight liquidity conditions.
- Phased exit from the cap on private credit growth to progress toward an interest-rate based monetary policy framework while avoiding an overly rapid expansion of credit.
- Financial stability:
- Continued efforts to strengthen financial sector oversight and build the financial sector safety net.
- Strengthening NBE’s financial position in due course.
Fiscal policy, revenue mobilization, and expenditure
- Revenue mobilization has been strong.
- Recent tax policy reforms expected to broaden the tax base and raise revenue potential.
- Importance of tax and customs administration reforms to broaden the tax base fairly and sustainably.
- Policy guidance:
- Continued prudence in raising spending despite occasional strong pressures, consistent with revenue performance.
- Efforts to develop domestic sources of financing are essential to maintain sustainable fiscal policy.
- Phasing out fuel subsidies is important for rebuilding fiscal buffers and improving spending efficiency.
- Social protection expenditure should be safeguarded.
Debt treatment and external financing
- Authorities continue efforts to restore debt sustainability and secure a debt treatment.
- Progress on debt restructuring negotiations under the Common Framework, including completion of the signing of the Official Creditor Committee Memorandum of Understanding.
- Discussions with private external creditors are ongoing.
- Financing assurances received and adjustment efforts made are consistent with IMF policy requirements and program parameters.
- Guidance: continued avoidance of non-concessional borrowing, except financing for the Koysha dam project, and careful evaluation of proposed new concessional debt to contain debt vulnerabilities.
Ethiopia — Selected Economic Indicators, 2022/23–2029/2030 (Prel./Proj.)
- Real GDP growth (%):
- 2022/23: 7.2
- 2023/24: 8.1
- 2024/25: 9.2
- 2025/26: 9.3
- 2026/27: 8.6
- 2027/28: 8.5
- 2028/29: 8.0
- Inflation - average (%):
- 2022/23: 32.5
- 2023/24: 26.6
- 2024/25: 16.0
- 2025/26: 11.9
- 2026/27: 8.3
- 2027/28: 6.2
- General government finances (% of GDP):
- Revenue:
- 2022/23: 7.9
- 2023/24: 7.3
- 2024/25: 10.5
- 2025/26: 11.2
- 2026/27: 11.7
- 2027/28: 12.1
- 2028/29: 12.3
- Expenditure:
- 2022/23: 10.8
- 2023/24: 9.5
- 2024/25: 12.0
- 2025/26: 13.1
- 2026/27: 12.8
- 2027/28: 13.9
- 2028/29: 14.1
- 2029/30: 14.3
- Fiscal balance, including grants:
- 2022/23: -2.6
- 2023/24: -2.0
- 2024/25: -1.2
- 2025/26: -1.8
- 2026/27: -1.1
- 2027/28: -1.7
- 2028/29: -1.6
- Public debt (% GDP)1:
- 2022/23: 40.2
- 2023/24: 35.4
- 2024/25: 50.3
- 2025/26: 45.1
- 2026/27: 40.7
- 2027/28: 37.6
- 2028/29: 34.5
- 2029/30: 31.8
- 1/ Public and publicly guaranteed external debt, which includes long-term foreign liabilities of NBE and external debt of Ethio-Telecom. Does not include expected debt relief.
- Money and Credit:
- Broad money (% change):
- 2022/23: 35.2
- 2023/24: 25.9
- 2024/25: 21.8
- 2025/26: 22.6
- 2026/27: 22.0
- 2027/28: 21.4
- Credit to private sector and state-owned enterprises (% change)2:
- 2022/23: 28.6
- 2023/24: -9.7
- 2024/25: 31.3
- 2025/26: 23.2
- 2026/27: 18.9
- 2/ Projections from 25/26 include impact of CBE recapitalization
- Balance of payments:
- Current account (% GDP):
- 2022/23: -2.9
- 2023/24: -2.3
- FDI (% GDP):
- 2022/23: 2.1
- 2023/24: 1.9
- 2024/25: 3.2
- 2025/26: 2.9
- 2026/27: 3.0
- 2027/28: 3.1
- Reserves (in months of imports):
- 2022/23: 0.5
- 2023/24: 0.7
- 2024/25: 2.2
- 2025/26: 2.7
- 2026/27: 3.5
- 2027/28: 3.7
- 2028/29: 3.9
- External debt (% GDP):
- 2022/23: 18.1
- 2023/24: 15.7
- 2024/25: 31.6
- 2025/26: 29.8
- 2026/27: 27.0
- 2027/28: 24.4
- 2028/29: 21.2
- 2029/30: 18.4
- Exchange rate:
- Real effective exchange rate (% change, end of period, depreciation –):
- 2022/23: 24.1
- 2023/24: 12.4
- 2024/25: -44.2
Press Release No. 26/009, January 16, 2026 — International Monetary Fund.