Trending 
The International Monetary Fund (IMF) has reached an agreement with Ethiopia to release an additional $468 million in bailout funding, citing the country’s strong economic performance while warning that the ongoing conflict in the Middle East poses significant risks to Ethiopia’s outlook.
The latest disbursement forms part of Ethiopia’s approximately $3.4 billion IMF support programme, which was approved in July 2024. The funds will be released following the successful completion of the fifth review of the loan arrangement, although the agreement still requires final approval from the IMF’s Executive Board.
According to Alvaro Piris, who led the IMF mission to Ethiopia last month, the government has continued to make progress in implementing its Homegrown Economic Reform Agenda. He noted that macroeconomic indicators remained encouraging before the escalation of the conflict in the Middle East.
“The authorities have continued to make progress in implementing their Homegrown Economic Reform Agenda, with favorable macroeconomic outcomes through to the onset of the war in the Middle East,” Piris said.
He highlighted improvements across several key sectors of the economy, adding that “output indicators, exports, reserves and government revenue all continued to improve through early 2026, alongside declines in inflation.”
However, Piris cautioned that the war, launched by the United States and Israel against Iran in late February, has created a major external shock for Ethiopia. The conflict has driven up global fuel and fertiliser prices, increasing pressure on one of Africa’s largest economies.
Despite these challenges, the IMF believes the impact on Ethiopia has so far been limited. Piris said economic activity remains resilient, noting that the conflict’s effects on growth and consumer prices have been relatively modest. “Even so, economic activity appears robust, with as-yet modest impacts on output growth and consumer price inflation,” he said.
The IMF forecasts Ethiopia’s economy will expand by more than 9% in 2026, making it one of the fastest-growing economies globally. Growth is expected to be supported by continued investment in infrastructure projects and industrial development.
The positive assessment comes at a politically significant moment for Prime Minister Abiy Ahmed and his Prosperity Party, which is widely expected to secure a decisive victory in national elections held this week. Official results are due on June 11.
Abiy, who has led Ethiopia since 2018, initially gained international recognition for reforms and for restoring relations with neighbouring Eritrea, a move that earned him the Nobel Peace Prize. In recent years, however, his administration has faced criticism from opponents and rights groups over concerns about increasing authoritarianism.
While economic reforms have helped boost exports and attract investment, Ethiopia continues to face substantial structural challenges. The country remains burdened by high levels of debt, elevated inflation and widespread poverty, with around 40% of the population estimated to be living below the poverty line.
The IMF’s latest endorsement signals confidence in Ethiopia’s reform efforts, but it also underscores the vulnerability of the country’s economic recovery to external shocks and ongoing global instability.
