IMF Engagement with Ethiopia: A Path to economic recovery
The International Monetary Fund (IMF) is evaluating Ethiopia's application for financial assistance to reconstruct its economy, which has been severely damaged by conflict, drought, and inflation. An IMF team is in Addis Ababa undertaking technical work in preparation for an IMF-supported program in Ethiopia. Current conversations with Ethiopian officials are focused on reform plans, and measures to help Ethiopia address its greatest challenges. Discussions have primarily focused on standard monetary policy issues the IMF has asked Ethiopia to address, such as managing exchange rates and foreign currency reserves, controlling inflation, and maintaining financial stability. The potential program would support the government’s Homegrown Economic Reform (HGER) program and help Ethiopia stabilize its economy.
The IMF has resumed its relationship with Ethiopia at a time when the government is attempting to raise funding for the nation's recovery and launch the second HGER. This second iteration is expected to cost USD 10 billion. But Ethiopian Finance Minister Ahmed Shide says that USD 20 billion will be required for a recovery program to rehabilitate war-torn Tigray, as well as parts of the Afar and Amhara regions.
The HGER, an economic reform strategy unveiled by the Ethiopian government in late 2019, aspires to unleash the nation's growth potential and catapult it toward becoming a symbol of African wealth by 2030. The initiative is based primarily on macroeconomic, structural, and sectoral reforms aimed at stabilizing the economy, lowering inflation, addressing scarcity in foreign currency, and boosting the competitiveness of priority sectors including agriculture, manufacturing, information, communications and technology, mining, and tourism. The stated goals of these reforms are poverty reduction and inclusive growth.
In 2019, the IMF obtained a staff-level agreement to approve a USD 2.9 billion loan for Ethiopia as part of a program to offer a balance of payments support for its cash-strapped economy, and technical assistance for the HGER, pending board approval. The loan was suspended, however, following the outbreak of war in Tigray. Ethiopia's Extended Fund Facility (EFF) and Extended Credit Facility (ECF) were also phased out at that time.
IMF's re-engagement with Ethiopia follows a cessation of hostilities agreement (COHA) between the federal government of Ethiopia and the Tigrayan regional government. The IMF has said it welcomes Ethiopia’s progress towards restoring lasting peace and stability through the “cessation of hostilities agreement” and that implementation is progressing, including the restoration of humanitarian assistance and basic services to Tigray.
Prior to resuming direct economic assistance to the Ethiopian government, the US, the largest shareholder in the IMF, and the EU have stated that three conditions must be satisfied. The first two are the cessation of hostilities, and aid to Tigray. The third is accountability for human rights violations. A ceasefire agreement negotiated in November 2022 has brought an end to hostilities and allowed some relief to reach parts of the region. In accordance with the Ethiopian Constitution and the African Union's Transitional Justice Policy Framework, the COHA also calls for "a comprehensive national transitional justice policy aimed at accountability, establishing the truth, redress for victims, reconciliation, and healing." Much more work is needed on this front.
The government has made some progress, and it is anxious for donors to return to assist in the recovery of the war-devastated economy. In September 2022, the Ministry of Justice released a discussion paper presenting options for transitional justice. This explored numerous approaches to transitional justice, including the formation of a specialized "truth and reconciliation commission," the construction of a special prosecutor's office, and the use of existing institutions. But it dismissed the idea of an ad hoc international tribunal as "neither desirable nor practical." There are serious concerns about the transparency of transitional justice if it is left in the government's hands.
There is no doubt that IMF assistance can boost Ethiopia's economy, which has been severely hit by a variety of shocks, including 6 years of drought. The net impact of these shocks has been a host of economic problems, including rising inflation, a currency crisis, a widening balance-of-payments crisis, and an increasing burden of external debt. A spike in unemployment, food insecurity, and severe shortages of essential goods have exacted a catastrophic socioeconomic and political toll on Ethiopia that must be well and properly addressed. In conclusion, the International Monetary Fund's engagement with Ethiopia provides hope for the country's economic recovery. With the proper implementation of reform measures, Ethiopia can overcome its economic challenges and achieve inclusive growth and poverty reduction.
By the Ethiopian Cable team
Gain unlimited access to all our Editorials. Unlock Full Access to Our Expert Editorials — Trusted Insights, Unlimited Reading.
Create your Sahan account LoginUnlock lifetime access to all our Premium editorial content
On Tuesday, 14 April, the four-year term of Somalia's federal parliament ended, or rather, it didn't. Villa Somalia's (un)constitutional coup of a year-long term extension for the parliament and president in March remains in effect, leaving the institution in a kind of lingering zombie statehood. It is perhaps a fitting denouement for the 11th parliament, whose degeneration has been so thorough that its formal expiration means little in practice.
Yesterday, 15 April, marked three years of brutal, grinding warfare between the Sudanese army and the Rapid Support Forces (RSF). Wholly neglected by a fading international community, many grim landmarks have been passed; another genocide in Darfur, the weaponisation of rape and starvation, another famine, or the desecration of Khartoum, El Fasher, and other major cities. And with no ceasefire or settlement in sight, the war has continued to swell, drawing in each neighbouring African country as tussling Middle Eastern powers grapple for the upper hand-- leaving Sudan in tatters.
As global energy markets reel from the partial shutdown of the Strait of Hormuz and war insurance premiums skyrocket by nearly 4,000%, an unlikely maritime security provider is emerging as a critical stabiliser in one of the world's most vital shipping corridors. The Somaliland Coast Guard, operating from the port city of Berbera, has quietly begun providing maritime escort services, seeking to reduce shipping insurance costs—and consequently, the price of commodities and energy for consumers across the Horn of Africa and beyond.
Most nights in a number of dimly lit bars in Addis Ababa, one can hear a vibraphone hum over a syncopated bassline. The sprightly rhythm is unmistakably jazz, but the scales are Ethiopian; pentatonic, looping and melodic. Five decades after its pioneering by visionary musician Mulatu Astatke, Ethio-jazz remains in full swing, with its renaissance from the late 1990s persevering despite tough political and cultural conditions.
Over the weekend, a flurry of viral posts on X (formerly Twitter) highly critical of Türkiye by the Ugandan army chief risked tipping the three-way relations between Somalia, Türkiye, and Uganda into a new tailspin. General Muhoozi - the son of Ugandan President Yoweri K. Museveni and the Chief of the Ugandan People's Defence Forces (UPDF) - accused Türkiye of disrespect, threatened to pull troops out of Somalia, and further demanded USD 1 billion in compensation from Ankara. Although the posts were deleted on Sunday, the storm the comments generated has not died down.
The 19th-century Russian novelist Fyodor Dostoevsky wrote in his novel, The Brothers Karamazov: “Above all, do not lie to yourself. A man who lies to himself and listens to his own lie comes to a point where he does not discern any truth either in himself or anywhere around him.” In Somalia today, we are suffering because our head of state has lied to himself so much so, that Dostoevsky had alluded to, he has reached a point where he does not discern any truth either in himself or anywhere around him. However, before we delve into the nature or purpose of the lie and its grave national, regional, and international consequences, a bit of history is warranted on Somalia as a nation-state.
In September 2025, Feisal Mohammed Ali was arrested for possession and trading in two rhino horns worth USD 63,000. This was not the first time that this smuggler had seen the bars of a Kenyan prison cell. On 22 July 2016, Feisal - described as an “ivory smuggling kingpin” - received a 20-year prison sentence and fined USD 150,000 for dealing 314 pieces of ivory. Weighing over two tonnes, the ivory was estimated to have come from around 120 elephants. Hailed as a turning point in Kenya’s pioneering crackdown on Illegal Wildlife Trade (IWT), Feisal’s incarceration became proof of the country’s commitment to safeguarding its wildlife. This frail pillar came crashing down in August 2018 when Feisal was released following the acquittal of his sentence due to alleged use of tampered evidence by the prosecution.
On Monday, a politician widely regarded as Ankara’s primary proxy in Somalia was inaugurated as a Member of Parliament (MP) under circumstances that Somali citizens and political observers are denouncing as a brazen institutional theft. This unprecedented case of electoral misconduct occurs in the twilight of the current parliament’s mandate, signaling a deep-seated crisis in legislative integrity.
The sparks from the Middle East's conflagration have set Ethiopia's laboured fuel industry ablaze, and the country is grinding to a halt. Ongoing geopolitical and fiscal shocks emanating from the US/Israel war with Iran—and the spill-over across the Gulf—have left few regions untouched. With no satisfactory end in sight, the decades-old—if creaking—US-underpinned security architectThe sparks from the Middle East's conflagration have set Ethiopia's laboured fuel industry ablaze, and the country is grinding to a halt. Ongoing geopolitical and fiscal shocks emanating from the US/Israel war with Iran—and the spill-over across the Gulf—have left few regions untouched. With no satisfactory end in sight, the decades-old—if creaking—US-underpinned security architecture in the Middle East has been upended, as have the globalised hydrocarbon networks that long served as the financial lifeblood of energy-importing states.