Addis Ababa – The International Monetary Fund has raised the alarm over the sustainability of the sweeping economic reform programme, warning that momentum may stall as international donor support continues to wane.
In its latest country review published on Tuesday, the IMF commended Ethiopia for meeting key performance benchmarks under its $3.4 billion loan agreement. The government has implemented politically sensitive measures, phasing out subsidies, introducing tighter monetary controls, and embarking on long-overdue tax reforms.
Yet beneath these headline achievements lies a more precarious reality.
The Fund warned of rising pressures from a resurgent parallel foreign exchange market, persistent inflationary trends, and mounting regional insecurity, particularly in fragile areas such as Amhara and Oromia.
These risks, the report notes, could undermine the credibility of reforms and complicate ongoing debt restructuring talks with bilateral and private creditors.
Donor hesitation, especially from Western partners, has emerged as a critical challenge. Once vocal backers of the post-war economic revival, several donors have scaled back financial commitments amid concerns over human rights and governance issues.
For many ordinary people, the reforms have yet to translate into tangible relief.
“Food is more expensive, fuel is scarce, and we don’t see the change they promise,” says Mulu Habtemariam, a small trader in Merkato. “People are paying more, but earning less.”
The IMF underscored the need for clear communication and robust social protections to cushion the most vulnerable from the immediate costs of reform.
As Ethiopia navigates a fraught economic landscape, policymakers now face a delicate balancing act: pushing forward with structural adjustments while keeping public trust intact and re-engaging a fatigued donor community whose support may prove vital for long-term recovery.