IMF review and bondholder agreement strengthen Ethiopia's economic reform efforts
via The Reporter Ethiopia9 min read
The IMF Executive Board completed its fifth review of Ethiopia's Extended Credit Facility ECF arrangement, enabling the country to draw USD 464 million. This marks the halfway point of the four-year program, which aligns with the federal government鈥檚 Homegrown Economic Reform program, projected to require USD 10 billion by mid-2028. The IMF's total contributions now stand at nearly USD 2.65 billion, with an additional USD 200 million for Middle East war-related pressures. This approval provides crucial support as Ethiopia prepares for the 2026/27 fiscal year, with a proposed federal budget of 2.34 trillion Birr, a significant increase from the 1.55 trillion Birr budget when the IMF program began in July 2024. The IMF stressed the importance of maintaining a tight monetary stance to control inflation, prudent expenditure management, and sustained revenue mobilization. It also praised efforts to grow tax revenue while cautioning about the impact of the growing tax burden on businesses. Furthermore, the IMF board acknowledged progress in debt restructuring, including an agreement-in-principle with Eurobond holders. This agreement, which includes subscription rights for a new international bond, follows a previous rejection in January and is crucial for Ethiopia's debt treatment under the G20 Common Framework. Nigel Clarke, deputy managing director and chairman of the board, emphasized the importance of completing the debt restructuring process and prudent new debt contraction. H
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The Commercial Bank of Ethiopia CBE holds a 70 percent market share in the country's digital finance landscape, according to a report by bank President Abe Sano. Over the past fiscal year, which ended on June 30, CBE facilitated 3.48 billion digital transactions valued at over 22 trillion Birr. The bank also mobilized 707.4 billion Birr in deposits during this period, increasing its total outstanding deposits to 2.4 trillion Birr. This marks the first time a single bank has mobilized such a large amount of deposits in one year, with CBE's total deposits quadrupling in six years. CBE provided 648 billion Birr in credit, with nearly 91 percent directed to the private sector, a significant increase from 10 percent in 2019/20. The bank's total outstanding credit stands at 1.64 trillion Birr, and its non-performing loan ratio is 1.4 percent. CBE's market share is 50.1 percent in deposits, 48.3 percent in credit, 50.1 percent in assets, and 45.4 percent in capital. The National Bank of Ethiopia's Financial Stability Report for 2024/25 highlighted CBE's continued dominance and suggested mergers and acquisitions for other commercial banks, noting that 25 of the 31 banks collectively hold less than 22 percent market share. In comparison, Awash Bank, the largest private commercial bank, reported 467.8 billion Birr in outstanding deposits and 40.7 billion Birr in revenue for 2025/26.
Must ReadEthiopia was omitted from the latest Global Report on Food Crises GRFC because it did not provide acute food insecurity data that met the report's technical requirements. This raises concerns about the country's ability to accurately assess hunger and inform humanitarian responses. The 2026 report, produced by the FAO, WFP, and partners, noted that Ethiopia was among 18 countries where data was either unavailable or did not meet standards. Ethiopia remains vulnerable to food crises, but unlike previous editions, the report does not include estimates for 2025. The report cautions that this omission does not indicate improved food security but rather a decline in global monitoring due to funding shortfalls, access constraints, and difficulties in data collection authorization. The GRFC states that Ethiopia had data in the 2025 report, showing over 27 million people facing high levels of acute food insecurity in 2024, but no updated estimates were available for 2025. The report warns that weakening food security information systems are becoming a humanitarian concern, with shrinking donor funding reducing assessment frequency and coverage. This leaves policymakers and humanitarian agencies without an internationally comparable assessment of Ethiopia's food insecurity, highlighting the need for greater investment in monitoring and restoring regular, consensus-based food security analyses.
Must ReadA new assessment reveals that Europe's coffee sector generated over half a trillion euro in economic output and 251.5 billion euro in Gross Value Added in 2025, despite producing almost no coffee. This contrasts with Ethiopia, which continues to export predominantly unprocessed green beans. The study, titled "Economic Impact of Coffee in Europe," shows that while producing countries like Ethiopia supply the raw agricultural input, the majority of economic activity, employment, and tax revenue is generated after the coffee reaches Europe. In 2025, the EU27 imported 2.9 million tonnes of coffee worth 18.7 billion euro from non-EU countries, with over 97 percent being green coffee. The report indicates Ethiopia's significant reliance on the European market, with 34 percent of its coffee exports destined for the EU plus market, making it one of Ethiopia's largest export destinations for this product. Coffee exports to the EU+ account for 11.8 percent of Ethiopia鈥檚 total merchandise exports, underscoring its importance for foreign exchange earnings. The assessment highlights an imbalance, as Ethiopia is one of several coffee suppliers for Europe, but access to the European market is economically crucial for Ethiopia. The study notes that Europe imports almost all its coffee as green beans, with roasting and further processing occurring close to consumer markets. Germany is identified as the largest entry point for extra-EU coffee imports. The report concludes that coffee's economi