After a seven-month period of [fully] implementing its mandated economic policies and the disbursement of nearly 50 percent of a USD 3.4 billion Extended Credit Facility (ECF) package, the International Monetary Fund (IMF) undertook an official visit to Addis Ababa to ‘see where its loan receiver of over 850 percent above the quota is heading’.
Managing Director Kristalina Georgieva, a Bulgarian economist and former Vice President at the World Bank, was received with a markedly enthusiastic welcome. During her two-day visit, she assessed the ‘where the reform is heading.’
“Her visit was more celebratory,” said Eyob Tekalign(PhD), who accompanied the Managing Director as part of a delegation comprising the Prime Minister, the NBE Governor, the Finance Minister, and the Planning and Development Minister.
In broad terms, she appears to praise the Prime Minister and his economic team. What prompted this commendation? What are the implications of the IMF’s ‘kudos’? Do her remarks suggest anything beyond the surface? And how practical are the ‘prescriptions’ she mandated for the Ethiopian economy?
General Impressions
“It [the objective of the visit] was for her to get a sense of where we are rather than to have a technical discussion. We walked her through the key economic reform agendas we are working on; in different sectors,” Eyob told the Reporter Magazine.
Alongside official discussions and private sector interactions, the Managing Director toured unrelated projects, notably a Women’s Rehabilitation Center and a Boarding School for the visually impaired (an initiative of First Lady Zinash Tayachew). The IMF chief asserted that these visits demonstrated ‘how well-targeted social spending can create opportunities and transform lives.’
Madam Georgieva had only nice words to say about the Ethiopian government’s ‘homegrown’ economic reform, stating that she discussed the “impressive economic performance” with Prime Minister Abiy Ahmed (PhD).
“I saw here in Addis Ababa the signs of a vibrant private sector-led market economy—and am delighted the IMF is a partner for the government’s homegrown reform agenda,” she wrote on X.
Following her visit, officials appeared to project an air of self-satisfied accomplishment—a sense of ‘we played it well.’.
Though her visit was more “celebratory,” according to the State Minister, the IMF boss was presented with two key requests: additional budgetary support and more flexibility in terms of disbursement schedule, Eyob told The Reporter Magazine.
According to the state minister, the government has spent a quarter of its budget on social spending, designed to ‘make the reform smooth’. In IMF talks, Ethiopia is now requesting a larger share of the financial package for direct budgetary support.
“I hope she [the managing director] took it to heart,” said Eyob.
So far, the Ethiopian government has received 47 percent of the IMF’s USD 3.4 billion ECF package, which is scheduled for disbursement over the next three and a half years.
The IMF’s second review of Ethiopia’s reform, released in mid-January 2025, reported progress in areas such as: raising domestic fiscal revenues, strengthening state-owned enterprises, anchoring financial stability, modernizing the monetary policy framework, and improving foreign exchange market functioning.
On the other hand, the IMF’s recent report on Ethiopia drew criticism from a committee representing Ethiopian bondholders, who alleged institutional bias. On February 17th, the committee asserted that the IMF’s report contained ‘flaws’ that ‘artificially’ constructed a narrative of solvency challenges, thereby necessitating debt relief. The committee contended that Ethiopia’s difficulties stemmed from a liquidity constraint, rather than a solvency crisis, a distinction with direct implications for debt haircuts.
Eyob refuted the bondholders’ accusations, praising the IMF’s ‘very sensible job.’ He emphasized the global reliance on debt sustainability analyses (DSAs) from international financial institutions, stating, “We cannot be exceptions.”
“What they refer to is some leaked study from bank consultants. They should ask the bank if they have any questions,” he added.
‘Tough’ and ‘Time Taking’ Reform
While offering nice words, the IMF Managing Director conceded the ‘tough’ and ‘time-taking’ character of Ethiopian economic reform. This particular acknowledgment seems to resonate broadly.
“She got the sense of the challenges and opportunities,” says the State Minister.
Mussie Delelegn(PhD), an economist working at the UN Trade and Development Agency (UNCTAD), made the same observation, calling Georgieva’s comments “a candid and realistic account of the stark realities in countries such as Ethiopia, given the complexity of the reforms themselves.”
“No doubts, the reforms undertaken by Ethiopia are bold and “tough” by any stretch of the imagination,” Mussie said. “Maybe, the Managing Director was recognizing the difficulty of implementing such bold, complex and intricate policies given Ethiopia’s prevailing weak institutional and financial frameworks, generalized poverty situation, microeconomic and macroeconomic instability, as well as protracted conflicts facing the country.”
Just two days after her visit to Addis Ababa, during the World Government Summit in Dubai, Georgieva alluded to this perspective. Responding to Richard Quest’s question about countries struggling to adapt due to a lack of agility for ‘what is coming towards them’, she expressed concern for nations in conflict or post-conflict situations.
Though no specific country was named, she stated, “I actually wake up in the middle of the night worrying about these countries. [These countries] have very weak governance institutions. Their performance is very weak. What we need to do is to offer a healthy hand.”.
Georgieva did not disclose the specific list of countries causing her concern, nor did she clarify whether Ethiopia was included or excluded. She also did not define the ‘healthy hand’ she proposed.
During her visit to Addis Ababa, however, she described the IMF-backed reforms in Ethiopia as ‘time-taking,’ while expressing confidence in its positive results in the future.
Mussie qualifies her statement as cautious optimism.
“The Managing Director rightly hinted that policy reforms are time-taking, insinuating that Ethiopian policymakers should not expect ‘low-hanging fruits.’ She may be implicitly advising against ‘complacency, exuberance or exultation with short-term outcomes that have nothing to do with correcting structural distortions and deep-rooted challenges,” he noted.
The discrepancy lies in the IMF chief’s expression of pronounced optimism. In contradistinction to the Managing Director, Mussie and others regard such optimism as excessive and untenable.
The ‘Tremendous Reward’ Disconnect: IMF Promises vs. Local Skepticism
The Managing Director highlighted that ‘there is a lot for Ethiopia to be proud of,’ pointing to the country’s 8.1 percent economic growth recorded last year, which she indicated surpassed her organization’s projected 6.1 percent. Indeed, this has been a point of pride for government officials, yet it stands in stark contrast to the lived realities of ordinary citizens, whose lives remain largely unaffected by the gains.
The government also prides itself with the performance it has registered since the start of the full implementation of the IMF backed reform back in August 2024. The National Bank of Ethiopia recently released a half-year report, highlighting two key successes: a sharp decline in inflation from 29.4 percent to 15.5 percent [within a year], and an export increase.
The senior economist, however, questions the validity of these ‘celebrations,’ suggesting a misapprehension of the underlying factors. He posits that the observed results have little to do with the implemented policies and that the effects of these policies, whether positive or negative, manifest quickly.
“We should be mindful of the considerable time lag between policy reforms and outcomes, be they positive or negative. Policy suitability and long-term sustainability of outcomes cannot be evaluated based on short-term outcomes such as temporal price changes or accidental (windfallen) outcomes that have nothing to do with structural challenges and binding constraints to development,” said Mussie.
The ‘boost’ in export performance was, in fact, driven by gold and coffee, which experienced unprecedented price surges in the international market during this specific time frame. Consequently, gold revenue, for example, increased by 735 percent.
However, Eyob does not fully attribute this to external factors. While acknowledging the contribution of international price improvements, he maintains that policy changes also played a significant role in the performance increase.
“Have the stars aligned? Have we had a favorable international environment in the case of recent achievements? The answer is Yes. Mashallah. That is a good thing. But we would not have taken advantage of this hadn’t we worked on our policy,” he contends.
Mussie disputes the government’s claims. He highlights the fact that imports have significantly increased and inflation remains stubbornly high, especially for critical farm inputs such as fertilizers, intermediate industrial goods, fuel, machinery, and pharmaceuticals.
Although the IMF chief articulated her optimism that the reform would ‘bring tremendous rewards,’ Mussie, conversely, does not subscribe to this optimistic outlook. He believes that the preconditions for successful economies are generally absent in Ethiopia.
“Economy-wide productivity and productive capacities are low, the trade deficit is bulging, public indebtedness is soaring, inflation remains worrying, skilled and educated labor force is bare minimum, political instability and corruption remain widespread. Under such difficult socioeconomic and political circumstances, improving economic efficiency and export competitiveness can be regarded as overstretching to sky-scratching,” he said.
“The Ethiopian government has been following expansionary budgetary policy for several years under a developmental state model. Large infrastructural projects, including the Renaissance Dam, are yet to be completed in the coming few years. Given the paucity of external development finance on which Ethiopia used to heavily rely, post-conflict reconstruction (ongoing conflicts in the Amhara and Oromia regions as well as the continued political instability in the Tigray region) – dealing with all these require expansionary financing,” said the senior economist.
“How will Ethiopia follow the prescribed austerity measures under difficult domestic and international environments remains to be seen.”
Kebour Ghenna, executive director of the Pan African Chamber of Commerce and Industry (PACCI), views are even more critical of the Managing Director’s optimism.
“Import costs have doubled, and Ethiopian families, who never asked for an IMF ‘rescue,’ suddenly found that a bag of flour now costs two bags of money,” he said.
In a context where the Ethiopian economy is predominantly marked by substantial allocations to conflict, superfluous office renovations, and extravagant ventures, rather than substantive initiatives aimed at structural transformation, figures like Kebour view the Managing Director’s optimism as misplaced.
Patterns in Communication: IMF’s Recycled Remarks
One major critique of the IMF chief’s pronouncements centers on the organization’s propensity to employ analogous rhetoric across fundamentally dissimilar economies in widely varying contexts. As a result, her remarks have been met with criticism from some quarters, while others deem them inconsequential.
Kebour dismisses the IMF’s approach as mere routine and not to be taken seriously. He likens the IMF’s statements to “favorite cures from a doctor who provides a single prescription for every patient.” He points to similar remarks made by the IMF during visits to other countries with differing contexts, implying a pattern.
“Remember, the IMF made the same remark during the Managing Director’s visit to Nigeria years ago,” said Kebour.
Kebour further argues that the IMF’s comments should be interpreted solely as reflecting its institutional interests and expecting the IMF’s leadership to be concerned with Ethiopia’s internal struggles—the cost of living, the conflict—is simply unrealistic.
“Her focus is on the government’s adherence to the IMF’s prescriptions: floating the foreign exchange, strengthening the central bank’s independence, and reducing government spending. Progress is measured by compliance with these directives, and broader societal issues are not a priority,” Kebour noted.
Mussie stresses that the ultimate objective of any policy reform is to accumulate capital, achieve inclusive growth and sustainable development while improving the living standards of citizens. “Otherwise, reforms, including those Ethiopia has been implementing, will lose meaning and purpose,” he warns.
“For the sake of socioeconomic wellbeing and political stability, economic policy reforms must produce favorable outcomes—no matter what,” he remarked. “While there is no blueprint to guide reform processes, almost all countries are prescribed the same or identical adjustment policies contained in what is collectively called the ‘Washington Consensus.’ Broadly regarded as stabilization and liberalization policies, each of these pillars in turn consists of a series of intricate areas for intervention,” said Mussie.
These range from exchange rate stabilization, tax reforms, property rights protection, removing subsidies and budget restriction to deregulation, privatization and liberalization including financial liberalization, according to the economist.
“Local conditions do matter. Neither do the timing of reforms and policy sequencing,” Mussie added.
Kebour observes that the IMF is usually not bothered with such conditions. “Never mind that Ethiopia isn’t Argentina, Egypt, or Nigeria, where similar policies have already gone horribly wrong. Never mind that Ethiopia is dealing with post-war reconstruction, drought, inflation, and political instability. The IMF prescription is the same. “
Justifying Public Patience: What’s the Plan?
Ultimately, the Managing Director emphasized the need for public calm, patience, and government support.
“I appeal to the public to be patient. Society must unite behind the reform. There is a lot of work to be done to make the economy more efficient. Please support the government in getting the job done,” said Georgieva.
What does this truly mean, and does it imply anything imminent?
For the State Minister and macroeconomic committee member, who said he was “surprised about how deeply she read into the challenges and opportunities,” her call was “loud and clear.”
“She was saying that a national development goal is a very difficult task. There are people who think that you can just press a button and change a country from one of the poorest countries to a prosperous one. That is not the case. It requires hard work and collective effort,” said Eyob.
However, Mussie suspects this call may, among other things, indicate the imminent danger of being locked into dire socioeconomic situations for the foreseeable future.
“My worries are about the spiraling chase between the official exchange rates and parallel market rates on the one hand, and the untamed inflationary pressure, growing public debt, and the structural trade deficit on the other hand,” he said.
Mussie considers these as “spillovers from bold policy reform that may stretch the patience of the ordinary people and make public support for the reforms unlikely.”
He observes that regardless of the statement’s implications, rallying public support for the government’s reforms is difficult due to the information gap between the public and policymakers regarding the reform’s rationale.
“It is not sufficiently clear whether the rationale for such difficult reform originates from the dire need for financial aid (loans) or from the genuine commitment of the government to remove egregious policy distortions,” said Mussie.
Meanwhile Kebour observes that the citizens, whom the IMF managing director calls upon to support the government and ‘get the job done’, are in fact helpless in the current crisis.
He believes the IMF offers little help to the current Ethiopian economy, which he describes as ‘precarious’.
“The Ethiopian Economy stands on the edge of a cliff, and the IMF just handed it a parachute with a few holes in it,” he said.
