MediumIV Macro Policy & Sovereign Debt2 November 2026, Monday
Ethiopia faces its IMF review as war returns to Tigray
The sixth review of Ethiopia's 3.4 billion dollar IMF programme is due in November; the country has drawn 2.647 billion dollars so far. The Fund projects growth of 9.2% this year, an assumption now strained by renewed fighting in Tigray.
According to The Reporter on 31 October, 2.647 billion dollars of the 3.4 billion dollar Extended Credit Facility signed in July 2024 has been disbursed, leaving roughly 753 million dollars. The sixth review is scheduled for November, with Executive Board approval expected in early 2027. The remaining tranches depend on the programme's 12 structural benchmarks. One of them requires a directive governing Treasury bill and bond issuance to be completed by the end of October.
Other items are slipping too. Ethiopia requested a new economic forecasting model in October 2024, with an initial target of September 2026; the completion date is now uncertain. The IMF will discuss the model's timetable and the issuance directive with the authorities at the sixth review in November. At 2.647 billion dollars, the programme has so far paid out about 78% of the total commitment.
According to DW on 2 November, the IMF forecasts growth of 9.2% and average inflation of 11.7% for the 2025–26 fiscal year. The November 2020 to December 2021 war caused 22.6 billion dollars of damage and 6 billion dollars of economic losses, with recovery needs put at 19.7 billion dollars. Ethiopia defaulted in late 2023 after missing a eurobond coupon payment. Abdulmenan Mohammed, a London-based analyst, says growth cannot be sustained if the conflict escalates.
Talay assessment
Bottom line
Ethiopia's IMF programme enters its final stretch carrying the cost of war. The remaining 753 million dollars or so hinges on 12 structural benchmarks, and approval has slipped to early 2027. The 2020–2021 war left 22.6 billion dollars of damage; if the new conflict drags on, the 9.2% growth and 11.7% inflation forecasts will break down together. The most likely path is a review that passes with deferred benchmarks and a delayed tranche.
Likely effects
- Public financesNegativeWeeks
Higher military spending would push the budget further onto Treasury bill auctions, which is why the issuance directive has become a key IMF benchmark.
- Inflation and currencyNegative1–6 months
If fighting hits rural output, food prices could push inflation above the 11.7% forecast and add pressure on the birr.
- Debt restructuringNegative1–6 months
Exit from the 2023 eurobond default depends on the IMF programme staying on track; a delayed review also delays talks with creditors.
Possibilities, ranked
- 1Conditional pass, delayed tranche55%
The November review reaches staff-level agreement with some structural benchmarks deferred, and approval follows in early 2027.
Watch: An IMF staff-level agreement announcement for the sixth review
- 2Review put on hold30%
The conflict strains the budget, the IMF asks for supplementary budget and spending data, and agreement slips into 2027.
Watch: A government announcement of a supplementary budget or defence spending
- 3Swift agreement15%
The issuance directive is completed on time, the conflict stays contained and the review closes on schedule.
Watch: Publication by the Ministry of Finance of the Treasury bill and bond issuance directive
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Left in IMF programme▼ ~753 mn dollars
- IMF growth forecast▲ 9.2%
- Inflation forecast▼ 11.7%