Ethiopia’s economy is projected to achieve a faster growth rate in the upcoming fiscal year, according to recent statements from the nation’s finance minister.
This optimistic outlook comes as the East African country continues its broad economic reform agenda, bolstered by an International Monetary Fund (IMF) loan program.
Finance Minister Ahmed Shide informed parliament that the economy is forecast to expand by 8.9% in the fiscal year beginning July 8, 2025, and ending July 7, 2026. This projection marks an increase from an estimated 8.4% growth in the current fiscal year.
Despite being recognized as one of the fastest-growing economies in the region in recent years, Ethiopia has navigated significant challenges, including a two-year conflict in its northern Tigray region.
The budget deficit is anticipated to see a slight increase, projected at 2.2% of gross domestic product (GDP) for the next fiscal year, up from 2.1% of GDP in the current period. Overall government spending is expected to reach approximately 1.9 trillion birr ($14 billion) for the upcoming year.
Ethiopia secured a $3.4 billion bailout from the International Monetary Fund (IMF) last year. This support was contingent upon, and accompanied by, debt relief assurances from key creditors, including China and the Paris Club.
In return for this assistance, Ethiopia committed to implementing substantial economic reforms. These reforms include a move towards market-determined exchange rates and a currency devaluation, measures intended to stabilize the economy and attract foreign investment, though challenges like persistent inflation and currency shortages persist.
The central bank has maintained tighter control over the money supply and limited private-sector lending as a measure against inflation, which stood at 14.4% in April.
Ethiopia is also actively working to open its banking and telecom sectors to further foreign investment, aiming to foster greater competition and innovation within its economy.
This projected growth underscores the Ethiopian government’s ongoing commitment to economic recovery and reform as it addresses both domestic imperatives and the dynamics of the global economic landscape.
