The International Monetary Fund (IMF) has greenlit $261 million in funding for Ethiopia following the successful completion of its fourth program review, marking a critical milestone in the East African nation's economic recovery efforts. This disbursement brings total support under Ethiopia's $3.4 billion Extended Credit Facility arrangement to over $1.6 billion since the program's inception in 2024.
Ethiopian authorities have maintained reform momentum through measured fiscal adjustments and monetary tightening, with IMF officials noting these measures helped reduce inflation from 28% in early 2025 to 18% by December 2025. "Sustaining this progress remains vital for long-term growth and poverty reduction," stated the IMF in its January 16 announcement.
The development comes as Addis Ababa finalizes debt restructuring agreements with international bondholders and bilateral creditors. A preliminary deal reached this month on Ethiopia's $1 billion Eurobond – defaulted in 2024 during COVID-19 recovery challenges – now awaits formal creditor approvals.
IMF Communications Director Julie Kozack confirmed the Fund is evaluating whether the bondholder agreement aligns with program parameters. This follows Ethiopia's 2025 breakthrough in restructuring $3.5 billion of bilateral debt through the G20 Common Framework initiative.
Analysts suggest these successive financial milestones could restore investor confidence in Africa's second-most populous nation, though challenges persist in balancing reform implementation with social stability needs. The government continues working to stabilize currency markets and attract overseas investment through manufacturing sector reforms.
