The International Monetary Fund (IMF) has cautioned Ethiopia that its recent reforms, backed by a $3.4 billion loan, may not be enough to ease its debt restructuring efforts. While the agency acknowledged the country’s push toward economic reforms—such as subsidy cuts, tax changes, and currency liberalization—it also flagged significant risks that could complicate said reforms. According to an IMF executive, security issues and a sharp decline in foreign aid, now under 4% of GDP compared to 12% a decade ago, pose major threats to Ethiopia’s recovery. Addis Ababa defaulted on its debt in December 2023 and has since reached a preliminary deal with official creditors. However, it still needs to secure comparable terms with private bondholders to move forward with its restructuring plan.
SEMAFOR
