IMF Signals Pause in New Lending to Ethiopia As Review Nears

Mintesinot Nigussie

The International Monetary Fund is not expected to release additional funding to Ethiopia in the current fiscal year, even as the country prepares for a key programme review in the coming weeks. The development comes ahead of a planned mission to Addis Ababa in May to conduct the fifth review of Ethiopia’s four-year macroeconomic reform programme.

Ethiopia has been implementing a broad reform agenda supported by the IMF arrangement, which was approved with a total financing envelope of 3.4 billion US dollars aimed at strengthening the country’s balance of payments position. So far, about 2.2 billion US dollars has been disbursed in tranches linked to periodic performance reviews and policy milestones.

Under the programme structure, further disbursements depend on IMF Executive Board approval after each review, based on progress in implementing agreed reforms, including macroeconomic stabilisation measures and structural adjustments. The upcoming fifth review is expected to evaluate Ethiopia’s recent policy steps under its ongoing economic reform plan.

Ethiopia had requested about 260 million US dollars following the latest review cycle. However, Alvaro Piris, IMF Mission Chief for Ethiopia, said that no additional disbursement is expected during the current fiscal year.

The IMF mission, led by him, is expected to engage with Ethiopian authorities during its visit in May as discussions continue on the next phase of the programme. The pause in new lending reflects the timing of the review process rather than any fundamental shift in the programme’s direction.

Businesses and investors in Ethiopia are closely monitoring the outcome of the upcoming IMF review, as continued support from the Fund remains important for macroeconomic stability and access to additional external financing.

Overall, the IMF’s signal of a pause in new lending to Ethiopia ahead of the programme review underscores the importance of meeting performance benchmarks before further disbursements can be approved.