The International Monetary Fund has approved the third review of Ethiopia’s $3.4 billion loan programme, releasing $262.3 million in fresh funds.
The decision comes as Ethiopia pushes forward with debt restructuring talks under the G20 Common Framework, having defaulted in December 2023.
Ethiopia and the IMF reached a staff-level agreement on May 30, citing strong progress in economic reforms, reduced inflation, and resilient growth.
The IMF praised the government’s reform efforts, noting steady implementation during the first year of the programme, which runs through 2028.
In parallel, Ethiopia has finalised a debt restructuring Memorandum of Understanding with official creditors, co-chaired by France and China.
That deal aims to restructure $8.4 billion in debt and provide $2.5 billion in debt service relief over the programme’s lifetime.
The IMF stresses that Ethiopia needs to reduce debt service payments by $3.5 billion to restore long-term fiscal sustainability.
Ethiopia must also resolve issues surrounding its $1 billion Eurobond, as talks with private bondholders remain deadlocked.
Bondholders have rejected a writedown on principal, arguing the crisis is one of liquidity, not solvency, creating further tension in negotiations.
The IMF stands by its debt assessment, underscoring the urgent need for comprehensive relief to stabilise the economy.
Ethiopia’s economic fate now hinges on successfully balancing international support, investor confidence, and long-term recovery.
