Ethiopia is expected to return to double digit economic growth this fiscal year, driven by a reform program supported by the International Monetary Fund (IMF) that has eased foreign exchange constraints, boosted exports, and improved macroeconomic stability.
The government revised its gross domestic product (GDP) growth forecast upward by one percentage point to 10.2 percent for the fiscal year ending July 7, marking the first time since 2016 - 17 that growth is projected to exceed 10 percent. The revision reflects early gains from reforms implemented under Ethiopia’s IMF financing arrangement.
Addressing lawmakers in Addis Ababa, Prime Minister Abiy Ahmed (PhD) said the reform agenda is focused on stabilizing macroeconomic imbalances, diversifying the economy beyond agriculture, and easing the country’s debt burden. A key measure has been the liberalization of the foreign exchange regime, which has improved access to hard currency for manufacturers and exporters.
Merchandise exports generated USD 5.1 billion in the first six months of the fiscal year, more than double the government’s target, according to the Prime Minister. An IMF report noted that export earnings are being supported by record global prices for coffee and gold. Gold exports surged to nearly 39 tons in the last fiscal year from 4 tons a year earlier, as previously smuggled supplies entered formal channels. Coffee exports are expected to exceed USD 3 billion this season.
Growth has also been supported by Ethiopian Airlines, Africa’s largest carrier, which recorded passenger numbers in the first half of the year that exceeded pre-reform annual levels.
Ethiopia is continuing negotiations to restructure its external debt after defaulting on USD 1 billion in eurobonds due at the end of 2024. The Prime Minister said the country has not entered into any new U.S. dollar denominated commercial loan agreements since the reforms began and expressed confidence that ongoing debt reprofiling will reduce Ethiopia’s debt risk to a moderate level once completed.
Source: Bloomberg
