The International Monetary Fund (IMF) has unveiled Ethiopia’s external borrowing plan for the 2026/27 fiscal year, which envisions contracting USD 4.9 billion in new external debt to finance critical infrastructure projects and support the country’s economic reform agenda amid mounting external pressures.
The IMF’s Fifth Review under the Extended Credit Facility (ECF) for Ethiopia indicated that the borrowing strategy combines concessional financing with a limited amount of commercial borrowing to fund priority investments while preserving debt sustainability.
Of the planned borrowing, approximately USD 3.95 billion—about 81 percent of the total—is expected to be secured on concessional terms, including USD 3.6 billion from multilateral development partners and USD 350 million from bilateral creditors.
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The remaining USD 950 million will be borrowed on non-concessional terms under a special exemption granted within the IMF-supported program, which otherwise prohibits commercial external borrowing.
The IMF said the entire non-concessional financing will be used to complete the Koysha Hydroelectric Dam, describing the project as “macro-critical to Ethiopia’s long-term economic strategy”. The international lending institution noted that the dam is already around two-thirds complete and that concessional financing for the remaining construction could not be secured. Once completed, the project is expected to boost electricity generation, expand rural electrification, increase export revenues, and support Ethiopia’s climate objectives.
The Fund also indicated that much of the concessional financing will help Ethiopia cope with the economic impact of the war in the Middle East, which has sharply increased the cost of imported fuel and fertilizer and intensified pressure on the country’s balance of payments.
