The International Monetary Fund expects Ethiopia to close its external financing gap over the 2024/25–2027/28 program period through a combination of World Bank budget support and debt treatment under the G20 Common Framework, according to its latest country report.
The IMF report estimates total exceptional financing at 10.6 billion US dollars for the four-year period. Of this, 3.4 billion US dollars is to be provided by the IMF under its Extended Credit Facility, 3.75 billion US dollars is projected from the World Bank, and the remaining 3.4 billion US dollars is expected to come from debt relief and restructuring under the Common Framework.
Recent negotiations show a mix of progress and hurdles. Ethiopia has reached an agreement in principle with institutional bondholders on its roughly 1 billion US dollar Eurobond and concluded a Memorandum of Understanding with the Official Creditor Committee under the Common Framework. However, some official creditors have pushed back on the proposed Eurobond restructuring terms, citing concerns over comparability of treatment, creating a temporary pause in parts of the restructuring process. Ethiopian authorities are working to finalize bilateral agreements with individual creditors and are seeking comparable treatment from private and other official bilateral creditors.
The report also highlights early gains in reserve accumulation. Gross international reserves rose by approximately 1.1 billion US dollars in the first quarter of the 2024/25 fiscal year. The current account deficit narrowed to 1.1 percent of GDP, supported by a ten-fold increase in gold exports and record coffee sales.
Despite progress, the IMF cautioned that external financing remains fragile due to potential delays in privatization receipts and reductions in Official Development Assistance. Authorities have established a “financing floor” to ensure spending adjustments if projected inflows do not materialize.
The IMF concludes that the combination of these financing sources, ongoing debt negotiations, and the market-determined exchange rate could place Ethiopia on a path toward debt sustainability, with the country moving from debt distress to a moderate risk rating by the end of the program in 2028.