The International Monetary Fund (IMF) this week released a report (World Economic Outlook) forecasting countries’ economic growth. The report states that the economy of Ethiopia is set to do better than the average world growth. However, there is high inflation in Ethiopia which could make things unstable.
The IMF predicts that the economy of Ethiopia will grow by 6.2% in 2024 and 6.5% in 2025. Whereas, the government of Ethiopia is expecting the economy to grow by 7.5%. Still, the expected growth of the economy of Ethiopia is better than the average world economic growth which is expected to be 3.2%.
As regards inflation in Ethiopia, IMF officials say that things will get worse before getting better. According to the Ethiopian Central Statistics Agency (ECSA), food prices and inflation in Ethiopia decreased in March 2024 as compared to February 2024.
IMF predicts that in Ethiopia, consumer prices will increase by 25.6% in 2024 and then it will decrease to 18.2% in 2025. However, the government of Ethiopia is expecting that the inflation will stay under 20% in 2024. Although, world inflation will go down from 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025, as per the IMF.
The Ethiopian government is in talks with both the IMF and the World Bank for a bailout package. A healthy development for the Ethiopian economy is the recent financing agreement with the World Bank. Earlier this month, The Ministry of Finance of Ethiopia and the World Bank signed six Financing Agreements amounting to 1.72 billion USD (approximately ETB 97.35 billion) in the form of credits and grants, for the implementation of six projects aimed at driving sustainable development and inclusive growth in the country.
A high-level Ethiopian delegation is in talks with the IMF these days. Paris Club members, which last year suspended Ethiopian loan payments for 3 years, gave a deadline of June 2024 to the Ethiopian government recently to reach an agreement with IMF.
The Ethiopian government will have to make key financial decisions in the coming days. One of the main decisions is about the devaluation of its currency birr. Ethiopian birr is under severe stress. The official exchange rate of the Birr is around 57 per dollar while in the black market, it is trading around 117 per dollar.
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Hello Mr. Sajid,
The so called IMF report is self-reported, and it does mean nothing. The Ethiopian economy is shrinking or barely above the water. That’s the reality. The PP government lies and makes up numbers as usual.
There are several ifs and buts about Ethiopian GDP growth forecast published by IMF
ThevEthiopian GDP can not growth as IMF described it. The country is in total turmoil and fails stress testing w.r.t. PESTLE. Political instability, Economic disparity, Social inequality, Technological fragments, Legal obstacles, and Environmental concerns. Besides, hundredth of thousands of urban and rural people are becoming unemployed. Availability of credit stalled. Foreign currency shortage dewarfed manufacturing sector, As such no viable financial sector policies are promulgated. Chronic corruption sustained and flourished. Lawlessness in the capital city aggravated crime. Famine in Tigray. War in Amhara region. The dying tourism due to current government ethnic based rule. Monopolization of public enterprises. Private sector role slowing down. Inflation and loss of purchasing power of local currency. Etc. All these factors have not been thoroughly assessed. We urge the IMF and World Bank push first the very existence of democracy in that country and an all out political reform with out the current regime. The current regine has had continued to bloodshed millions of civilians in the country.
Am open for discussion of each of the self explanatory issues I mentioned in my comments.
What surprised me to see is not the report from the IMF, but the selfish and ignorant political elites ( Bandas) paid from Egypt and other Ethiopia’s historically enemies. Ethiopia will prevail and no earthly power can stop it. Dr Abiy has proved all your banads wrong multiple times, When you said Ethiopia is going to collapse. Ethiopia will be the power house of Africa 🌍 !
I wish IMF and World Bank rather made the reform on domestic politics as a precondition for financial support/arrangements. Abiy Ahmad runs a very tribalistic, ethnic based political system which will never bring economic or political stability. Most of his figures are cooked numbers for political consumption. International institutions should pressure him to reform the domestic political situation rather. With a sound governing system, the market takes care of itself.
They link human rights situation to financing agreements