IMF Approves $262M Disbursement for Ethiopia Amid Debt Talks

The International Monetary Fund (IMF) has approved the third review of Ethiopia's $3.4 billion loan program under the Extended Credit Facility (ECF), unlocking $262.3 million in financing to support the country's balance of payments and fiscal needs. This approval reflects Ethiopia's significant progress in implementing its Homegrown Economic Reform Agenda, with improvements in inflation, export growth, international reserves, and fiscal discipline. The decision coincides with ongoing complex debt restructuring talks involving Ethiopia and its Official Creditor Committee, part of the G20 Common Framework, targeting the restructuring of $8.4 billion in debt and $2.5 billion in debt service relief through 2028. Despite defaulting since December 2023, Ethiopia has demonstrated economic resilience, aided by reforms such as liberalizing the foreign exchange market and enhancing revenue mobilization. The IMF emphasized the need for continued reforms to ensure external debt sustainability, improve fiscal transparency, and maintain monetary stability. Efforts to resolve outstanding issues with bondholders, especially concerning a $1 billion Eurobond, remain challenging as bondholders resist principal write-downs but acknowledge liquidity constraints.