Ethiopia’s Finance Minister Ahmed Shide told parliament this week that the country’s economy is expected to grow by 8.9% in the 2025/2026 fiscal year—an upward revision from the earlier 8.4% forecast—despite ongoing economic headwinds. The projection comes as Ethiopia continues to grapple with heavy debt, foreign currency shortages, and high inflation, which hit 14.4% in April. The revised growth estimate reflects cautious optimism as the country implements structural reforms under a $3.4 billion bailout agreement secured from the International Monetary Fund (IMF) in December 2023.
Under the IMF program, Ethiopia committed to key reforms including a partial float of its currency—triggering a 30% devaluation—alongside opening its telecom and banking sectors to foreign investment and implementing tighter monetary policies to control inflation. The central bank has since limited private-sector lending and adopted stricter controls on money supply.
The bailout was approved after Addis Ababa received firm commitments for debt relief from major bilateral creditors such as China and the Paris Club group. However, the currency reforms, while aimed at restoring macroeconomic stability and rebuilding foreign reserves, have contributed to a cost-of-living crisis for many Ethiopians.
The Ethiopian economy, once among Africa’s fastest growing, has suffered multiple shocks in recent years, including the COVID-19 pandemic, a two-year civil war in the northern Tigray region, and disruptions to global supply chains due to the war in Ukraine. These crises severely impacted public finances and investor confidence. Despite the challenges, Minister Shide emphasized that ongoing reforms and improving political stability could help restore growth momentum, attract investment, and unlock further international financial support.
