Speaking at a recent press briefing at the Ministry of Finance in Addis Ababa alongside Finance Minister Ahmed Shide, IMF Managing Director Kristalina Georgieva called on Ethiopians to support the government’s economic reform efforts.
According to IMF MD Kristalina Georgieva, now is the time for Ethiopia to come together, in unity, to achieve genuine reform.
“The reform Ethiopia has embraced is challenging and takes time, but it will produce results. I appeal to the public to remain patient. Society must stand behind the reform. There is a need for effort to improve efficiency. Please support the government in completing this task”, says Georgieva.
Georgieva’s visit to Ethiopia, her first since 2018, comes as the country continues to implement an IMF-supported reform program that began in July 2024.
The program includes structural changes aimed at stabilizing the economy, improving governance, and enhancing fiscal policies to sustain growth.
Both Georgieva and Minister Ahmed discussed the program’s progress but presented different perspectives on key issues emerging from the reforms.
While the minister emphasized economic resilience and long-term benefits, Georgieva acknowledged the difficulties of implementing reforms that impact daily life.
Georgieva stated that inflation had declined as a result of the reform program and that exports had increased. However, she acknowledged that addressing inflation required monetary and fiscal policies, increasing production, expanding exports, and strengthening the private sector.
These measures are part of the broader plan to create a sustainable economic model that reduces dependency on external assistance.
Ethiopia’s negotiations for debt restructuring under the G20’s Common Framework are at the final stage of the debt restructuring process.
“This is a top priority in my engagement with Ethiopia’s creditors,” says Georgieva.
Ethiopia was the first country to receive a debt standstill. Securing debt restructuring while continuing to service debt is a step forward.
Debt discussions remain central to Ethiopia’s financial stability, as the government seeks to reduce fiscal pressure while maintaining development initiatives.
Discussing tax measures introduced as part of the IMF program, Georgieva noted that Ethiopian authorities had identified areas of untapped tax revenue to support the national budget.
The government is working to enhance tax collection mechanisms and enforce compliance to increase domestic revenues, reducing reliance on foreign aid and external borrowing.
“Her Excellency’s visit strengthens our partnership,” says Minister Shide. He reaffirmed the government’s commitment to implementing the program’s directives and ensuring that economic policies align with national interests.
Georgieva highlighted that Ethiopia’s GDP growth had exceeded the IMF’s projections.
However, the IMF’s latest report advised the Ethiopian government to expand safety net programs to support a growing number of people affected by economic changes. Social protection remains a critical issue as the government navigates economic transformation while mitigating the impact on vulnerable populations.
Commenting on social protection measures, IMF Deputy Managing Director, and Acting Chair Antoinette Sayeh says that Ethiopia has been facing significant economic pressures amid a series of large shocks, high inflation, low international reserves, and unsustainable debt.
“The recent measures to decisively tackle macroeconomic imbalances, including moving to a market-determined exchange rate, removing current account restrictions, and modernizing the monetary policy framework to control inflation, are critical steps forward. The authorities’ policies are well calibrated to protect the vulnerable and mitigate the socio-economic impacts of the reforms. They will significantly increase the budget allocation to the targeted cash transfer program (PSNP). Temporary subsidies on fuel and fertilizers are also part of the fiscal package, and will need to be unwound gradually over time. Continuing to widen the reach and impact of the social safety-net programs will be important,” says Sayeh.
