Ethiopia is set to return to double-digit economic growth this fiscal year, driven by reforms supported by the International Monetary Fund (IMF) that have eased foreign exchange constraints and strengthened export performance.
The government on Tuesday revised its gross domestic product (GDP) growth forecast upward to 10.2 per cent for the fiscal year ending July 7, an increase of one percentage point from earlier projections. If achieved, it would mark Ethiopia’s fastest expansion since the 2016–2017 fiscal year, when growth last exceeded 10 per cent.
Prime Minister Abiy Ahmed, addressing lawmakers in Addis Ababa, said the improved outlook reflects the impact of wide-ranging economic reforms under the IMF financing programme. These include the liberalisation of the foreign exchange regime, which has improved access to dollars for manufacturers and exporters.
According to Abiy, merchandise exports generated $5.1 billion in the first six months of the fiscal year—more than double the government’s target.
“Among the main objectives of Ethiopia’s economic reform, the first is to stabilise macroeconomic imbalances,” Abiy said. “The second is to achieve high-quality growth by shifting from an agriculture-led economy to a more diversified, multi-sectoral structure, and another objective is to ease Ethiopia’s debt burden.”
The reforms have also opened up key sectors such as banking and telecommunications to foreign investors, while allowing non-Ethiopians to participate in retail and real estate.
Export earnings are expected to benefit further from record-high prices for coffee and gold, according to the IMF. Gold exports surged to nearly 39 tonnes in the last fiscal year, compared with just four tonnes a year earlier, as previously smuggled supplies entered official channels. Coffee exports are also projected to exceed $3 billion this season.
Ethiopia’s strong growth momentum is being reinforced by Ethiopian Airlines, Africa’s largest carrier, with passenger numbers in the first half of the year already surpassing pre-reform annual levels.
Despite the positive outlook, Ethiopia continues to grapple with debt challenges. The country is restructuring its obligations after defaulting on $1 billion in Eurobonds due at the end of 2024. While agreements have been reached with foreign governments on $8.4 billion in bilateral loans, talks with commercial bondholders remain contentious.
Abiy said Ethiopia has not entered into any new US dollar-denominated commercial loans since the reforms began, expressing confidence that ongoing debt reprofiling will reduce the country’s risk profile from “red” to a moderate level.
